Sunday, June 13

PayPal Quietly Announces Price Changes

At the outset, I have to admit that I'm a big fan of PayPal. I've used PayPal long before eBay purchased them - even before they were PayPal when they were (Now you know where the PayPal X comes from). I'm grateful that they enabled me, as a small business, to accept credit cards. (They also have awesome transaction downloads that make record keeping easier). I even wrote the introduction to PayPal for Dummies.
eBay's integration of PayPal made becoming an online seller simple for millions of people.

So you can imagine, that when I went to read the PayPal blog, I was shocked. They announced, with no fanfare or apologies, that they are making "changes" to the way they handle some of their charges:
  1. Refund Prices – Starting August 10, PayPal will retain the transaction fee (typically $.30) when a seller issues a refund (U.S. and Canada merchants).
  2. **** Without eBay having a shopping cart, sellers often eat multiple transaction charges when a customer buys two items. Now, should they have to refund an entire order based on multiple sales, PayPal makes money, and the seller's already low profits are eaten up.
  3. Chargeback Prices – Starting August 24, we’ll be increasing chargeback costs from $10 to the typical industry rate of $20 (U.S. merchants only, eBay merchants enrolled in the PayPal Preferred program are exempt).
  4. **** Chargebacks are issued by PayPal when a customer calls in and complains about the merchandise received from the seller. PayPal refunds the money to the buyer and takes a chargeback fee. In my experience PayPal has been fair when making chargeback decisions, but I've heard opposing views. The complaining customer gets their refund, and is not required to return the merchandise to the seller. So now the seller is out even more.
  5. American Express Card Acceptance – On July 13, PayPal and American Express will enter into a new card processing arrangement that requires merchants to establish a direct contractual relationship with American Express. You’ll need to accept a new agreement with American Express if you want to continue to accept American Express cards directly through Website Payments Pro and Virtual Terminal. PayPal will continue to service American Express transactions.  As part of this new agreement, American Express pricing will change to be on par with their typical industry rates. This only applies to taking American Express credit cards directly. There’s no change if a consumer chooses to pay with PayPal, no matter how the account is funded.
  6. **** OK, American Express has always stood behind their customers so if sellers wish to accept American Express directly, I guess it's fair that they have to play by Amex rules.
I'm disappointed that in this economy, PayPal has to raise charges -- especially without sending emails to their customers. Customer service is what it's all about -- they could have put a kinder spin on this.