Re: "... a racket that extorts fees from good companies..."
To be fair to PayPal, they fulfilled a need at a time.
It pretty-much sprung up with eBay, allowing you to pay a buyer without handing over details, affording you some basic buyer protections without having the additional expense of escrow (remember that on eBay), and allowing you to use a major credit card without your card issuer twitching too much.
Whether it's still needed is a matter for debate (which I'll dodge here), but the reason they're huge is because they opened up a new market in an efficient and responsible way.
Yes, you can still lose out via PayPal, but it's pretty rare.