I think you might be stuck with the term b&m, unless you want to call them 'physical' stores as opposed to online.  I think you'd be hard pressed to actually find a brick in a lot of so-called b&m's.

I think paypal have got too big for their boots, just as ebay did.  Ebay got so big that a lot of existing businesses felt they'd miss out if they didn't use ebay.  They managed to get a lot of big box retailers on board, as well as smaller retailers that once would never have considered selling on ebay, but eventually a lot of the smaller sellers got tired of the fees and set up their own websites so ebay started losing a lot of business (and steady business at that). 

In the same way, for a while paypal were riding high because they found their way into a lot of places they'd never been used before, but now there are more and more new payment methods springing up and if they're not careful they may find themselves uncompetitive.  That won't happen overnight but they can't ignore the possibility. 

I would have thought the way to keep their customers is to lower fees to stay more competitive, not increase them.  When someone raises their fees it's usually a sign of one of two things - either they have no competition and can charge what they like, or they're losing business and the only way to maintain their revenue is to increase fees.  There's a third possibility but that doesn't apply here (increased costs).

As has been said, it's not like it costs them much to process a refund and they always get to keep the 30c.  The person who gets the refund will most likely spend that money again so paypal get their fees on it a second time.  If it's costing businesses money to offer returns they're going to be looking into other payment methods.  Yes, some would have loans with paypal but I'm sure it won't be long before others start offering those services too.