PayPal have come in for criticism over a largely-unannounced change to the fees charged on private accounts. Payments sent to personal accounts used to be free, but now if the sender of the money marks the purpose of the payment as being for “goods” or “services” or funds the payment from a debit or credit card, the recipient is charged 2.9% + 30c transaction fee (or a whopping 3.4% + 20p in the UK). Many holders of private accounts are saying they had no notice of this change until they saw their payments received being nibbled at by PayPal.
PayPal claim that users were notified of the change, via email and a post on their official blog. But the latter makes no mention of new fees for personal accounts, only that personal payments funded by PP balance or bank account are free. And those who received the email say that message didn’t say anything about new fees either.
By way of explanation, there was a bizarre statement made by Charlotte Hill, PayPal’s PR manager:
“We didn’t want to make a huge formal communication out of this pricing change, because we weren’t really adding any fees, and we were hoping it would be a more useful experience for people.”
A further post on the PayPal blog entitled “A clarification on PayPal’s recent Send Money updates” hasn’t really clarified things very much.
PayPal’s new fees, clarified
This change is not about new fees; it goes way beyond that. It’s actually a fundamental shift in the way that PayPal accounts work.
Previously, the fees you were charged depended on the type of account you had. Premier and Business accounts were charged a percentage + flat transaction fee on every payment. Personal accounts were not charged at all (though they could not receive card-funded payments).
Now, fees are based on the type of payment you’re receiving. Those headlines that screamed “free personal payments for business sellers” should have added “but business-style fees for personal accounts receiving business-style payments”. PayPal’s new fee structure works like this – regardless of the type of account you hold:
| Source of funds | ||
| Payment for | Debit/credit card | PP balance or bank |
| Goods or services | fee | fee |
| Personal transfer | fee | no fee |
eBay sellers won’t – largely – be affected by this: we’ve been required for months to accept all forms of PayPal payment, however funded, and so we’ve all had to change to premier/business accounts. Those who will be hit are the people who’ve been using personal accounts to accept professional payments: and while it’s not unreasonable of PayPal to ask those who are using a business service to pay for it, what *is* unreasonable is that the change itself wasn’t flagged.
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