Paypal Buyer Complaint Policy says

------------------
The Buyer Complaint Policy only applies to payments for tangible, physical goods which can be shipped, and excludes all other payments, including but not limited to payments for intangibles, for services or for licenses and other access to digital content . In addition, items prohibited in the PayPal Acceptable Use Policy are ineligible for coverage.
-------------------

Although, this time I have resolved the matter but I want to ask if the same thing happens in future.
You provide a service to the user(code a program or design). You send him the program and the person pays you. Few days after you get a complaint from the user.
What do you do in such a case or what happens since this is not goods but when I go to "Resolve Complaints" I get only three options
1. Issue the buyer a full refund.
2. I can provide tracking information.
3. The buyer has already been refunded and I can provide proof of the previous refund

which are in no way related to the service
What happens if I dont respond for more than 10 days
Thanks for the help

PS: Which is the best payment method for getting service payments

You just pasted that buyer complaint policry does not apply except for tangible !
Services and codes are not , so he cannot complain .

But he did and when I go to Resolve...all I see is 3 options
It happened once in the past too and since there are 10 days to reply to such matters, I wrote paypal but there was no reply for 10 days
On 11th day they reversed the payment and I got reply to my matter saying "since this issue has been resolved, we are closing it"
I see the same happening this time too..
Any help??

You must be careful when dealing with untangible items. Because you cannot prove that he downloaded these items. If you didn't respond, it might turn into a chargeback, even worse.

The best thing will be obtaining own merchant account for processing. 3rd parties have poor seller protection for untangible items.

Try to have some Service Agreement for your downloads or designs, in some case you can use it against unauthorized use.

So you mean in this case, there is nothing I can do?

I don't know what should you do in this case, try to get your customers to sign a legal service agreement which you can use in such case.

Contact PayPal and tell them that the payment was for a service. They should close the complaint.

- Matt

I already did the same but there is no response
Its already more than 5 days and I am sure at the end of it when the transaction would be reversed, they are going to respond "Our record shows that the issue has been resolved, Thanks for using paypal"
Do you think I can do anything?
Also, in the past when I placed a complaint for a payment I made but didnt get the service, at the end of the week, all I heard from paypal is that "payment is for service and we cant do anything"
Can anyone explain how paypal works and what I can do about it.
I am sure I am missing something here

Hmmm... Try the "I can provide tracking information" and see if it gives you a text field where you can type in "Payment was for a service" - then, when a PayPal agent reviews it, they'll be able to see that it was ineligible for the Buyer Complaint process.

If you do nothing, the case will be decided in favor of the buyer, and the purchase will be refunded.

I see the same thing happening
There is no response for my queries from paypal and it is more than 4 days
Paypal really suck!!