PayPal US will no longer refund transaction fee

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PayPal have made some changes to their American user agreement.

Most contraversially, from August 10th they will no longer refund the 30c fixed transaction fee to the seller when a full refund is made. Instead, sellers will see both the refund amount sent to the buyer AND an additional 30c deducted from their account by PayPal.

The other major change is a 100% increase in the chargeback fee, from $10 to $20 for payments in US dollars (and the foreign currency equivalent if the payment was in another currency).

At the moment, these changes appear to be US-only: the UK policy updates section – as of time of writing – makes no mention of any similar policies. Only a matter of time? Your guess is as good as mine right now, though if we can find out if this might be coming to Europe, you’ll be the first to know.

This is going to make PayPal a very much more expensive option for US sellers, who are used to being able to refund payments where buyers have made a mistake, and re-invoice them with no penalty. In cases where buyers request a different shipping address after payment, sellers will be forced to choose between paying a double transaction fee, or losing their seller protection.

Where buyers pay for multiple small transactions and sellers have – until now – refunded those payments and combined into one large payment, there will no longer be any advantage to doing this: sellers of low-cost items, where buyers typically buy multiple items in one purchase, might as well put up all their prices by 30c + FVFs. And when buyers send their orders back or claim they’re lost in the post, there’s another fee for the seller too.

Every quarter, PayPal revenue is the star of eBay earnings, so it’s really not surprising they’re seeking to maximise that: as a PayPal spokesperson told AuctionBytes, “It has been more than a decade since PayPal has made a broad increase.” When you have a near-monopoly as they do on eBay, why wouldn’t you take advantage of it. Other merchant account providers have similar charges, so even off-eBay, PayPal aren’t putting themselves at any disadvantage. Why do you charge more? Because you can.

17 Responses

  1. Buyers make a mistake. Often happens on eBay as a result of eBay not offering a shopping basket.

    Sellers suffer a financial penalty for being nice to the buyer.

    Ebay should do something to simplify the buying process andmake it clearer before Paypal introduce these refund penalties.

    I have a website. Never have to refund ever for purchases made through this. Buyers comment how simple and clear the buying process is.

    Website buyers fill a basket and then checkout. When they checkout they can clearly see what the shipping cost total will be and the total basket cost and then have the option of removing items they don’t want or adding to items that they want more of and the basket updates automatically. They then select the payment option and receive a reply depending on which option they select.

    This should be the eBay process.

    Pure and simple and no need to do refunds as its right first time every time.

    eBay argue that it is complicated by their website having multiple sellers.

    No it is not!

    Offer an eBay shopping cart to eBay store subscribers only.

    All eBay need to do is give a store seller an “opt in” if they want to use an eBay shopping cart for their sales. Only that sellers goods can be placed in the shopping basket.

    Sellers who don’t want to use the basket for sales can “opt out”.

    The shopping cart would appear when auction winners/buyers enter the payment process. They would be given the option before entering the payment process of adding more of the sellers goods to the cart.

    More sales for sellers as a result.

    Why would a seller “opt out” in these circumstances?

    More sellers would open stores. Its a win/win for eBay and sellers.

    And there would be a dramatic fall in Paypal refunds!

  2. I’m dissapointed in Paypal, again. They are hated by a lot of businesses that uses them as part of their business, but yet they keep pushing and pushing.

    Paypal has the same pikey image that eBay is trying hard to lose, the Paypal logo on a business website, to me says “we are a small company and provide the option of Paypal so that pikeys can pay”.

    Instead of trying to get blood out of a stone, Paypal should start working on their image.

  3. “Other merchant account providers have similar charges”

    Who, how and by how much?

  4. I don’t like paypal because it does not allow me to pay in the way that I want to pay.

  5. I love Paypal, have recently changed to Paypal Only, best move I have made, no messing about with Cheques and NPBs.

  6. Are there going to be fees for a partial refund? If not, replacing a full refund with a (full refund – 1c) might be the answer in some circumstances – at least that would avoid the second fixed fee.

  7. Everyone will lose out with this new policy. Sellers will start to charge a “restocking” fee for returned items to cover these fees. 3.4% might not sound like much but it all does add up. And especially with large items.

    I suggest everyone checkout payvment for Facebook, looks like a potential ebay competetor providing they can make it more user-friendly and take on board all the suggestions people are making at the moment. Plus a 50 million customer base.

  8. Wow… While eBay keeps pressuring sellers to offer better customer service, which in my book means offering returns, sellers are now going to be punished by PayPay for accepting returns!

    I seriously scratch my head… Wouldn’t eBay/PayPal want to reward sellers instead?

    I sell retro video games, and people make mistakes in their purchases all the time. I’m always happy to accept returns. Should I be rethinking that practice?

  9. Shocking.

    I operate a no quibbles, money back guarantee, even without return (at my discretion). If the postal service fails to deliver, I will refund – as is my obligation under the UK Distance sellers act (UK fixed price sales).

    Nice one Paypal. If this carries on to the UK I will be stung for postal loss twice over. Thanks for that.


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