"We weren't really adding any fees." Uh, yes you were.
I hate paypal. Still use it, but fucking hate it. I keep forgetting that I hate it, and go back to using it, and then something like this comes up. Doesn't really affect me, but just reminds me how much I hate it.
There are plenty of other options. Western Union has a "send money with a credit card service"; you can always send a check or money order; there are escrow services (wherein both parties send money and merchandise to a trusted, disinterested third party, and after they receive both and payment for their services, they send both to their respective recipients).