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:
- Refund Prices – Starting August 10, PayPal will retain the transaction fee (typically $.30) when a seller issues a refund (U.S. and Canada merchants). **** 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.
- 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). **** 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.
- 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. **** 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.
Hi Marsha,
ReplyDeleteAnuj Nayar here from PayPal’s communications team. Thanks for the insightful post – always good to hear your perspective on eBay/PayPal. I wanted to clarify a couple of points you made in your post, specifically on the recent changes we made to our chargebacks and refunds policy. Retaining the fee for refunds is common practice in the payments industry and one that many alternative payment providers have always done.
I’m sorry that you feel these changes were rolled out quietly. That was certainly not our intention. In fact, we hoped to be MORE transparent, not less, in advance of these changes that start to come into effect next month. Aside from the blog post that we published on Friday, we’ve been sending out emails to every merchant who will be affected by the changes. Users can also see the policy update notification that appears when they log onto their account. We know that some of these changes may be a source of frustration for users, but we firmly believe we offer merchants the right tools at the right price to process payments and grow their businesses.
Anuj,
ReplyDeleteThank you for taking the time to weigh in. You got my point, it's all about transparency.
Marsha
So if it were common practice in the payments industry to NOT retain fees for refunds and Paypal currently did retain these, would Paypal follow common practice and stop retaining fees for refunds? I think not. This could have been Paypal's chance to set itself apart to us "little guys", instead they choose to "nickel and dime" us even further.
ReplyDeleteBTW I have 3 Paypal accounts and not one has received an email. This is more of a smoke screen then a "clarification".
-Tommy Day
More important than the "quietness" is the 50% fee raise!! I think that's worth mentioning for sure.
ReplyDeleteNew rate will be 3.5%. Currently we're paying 2.2% to process Amex on PayPal.
Way to use your leverage to get a great rate PayPal, thanks for nothing. If I wanted to pay full rates for Amex, I'd just sign up for my own merchant account anyways.
This 'small' change will cost Sellers 50+ % more in fees for each Amex transaction they process.
Talk about burying the lead.