Less than 48 hours left to process PayPal refunds for free

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You will want to be extra assiduous this week in processing all your PayPal refunds before Thursday. As of Thursday the 5th of March 2020 PayPal will start to retain all fees from transactions that you refund.

Since 2011 PayPal amended their terms and decided to keep the 20p fixed charge if a refund took place. Now, PayPal have decided that if you have to refund a buyer in a ‘Commercial transaction’, they will keep all of the fees you originally paid. With the PayPal refunds fee change taking place on Thursday it makes sense to process as many refunds as you can prior to that date, especially for higher value items where the fees will be larger.

Ideally you’ll be processing refunds on a daily basis anyway, but we know businesses are busy, especially at the start of the working week, and it’s easy to let refunds slide and do them after the last post on a Thursday. That’s bad business as an unhappy buyer doesn’t want to hang around waiting for their refund – delays just make what in their eyes is already a bad experience worse – but this week if you hang around until Thursday to process PayPal refunds it’ll simply end up costing you more anyway.

With PayPal keeping fees from refunded transactions from Thursday – for many it will be 2.7% of the transaction plus the fixed fee, you’ll want to assess your returns rates and decide if your prices need to increase for all customers in order for those buyers who keep their purchases cover the fees for those that return them. This seems unfair, but it’s no different to your other business expenses – buyers that return goods already don’t contribute towards warehouse and staffing costs, only buyers that keep their purchases pay the bills and PayPal fees will be no different.

From Thursday, returns will be just that little bit more painful. We don’t know how eBay Payments will handle fees on returns yet, but if you want to find out you can express interest for early migration here. (Expressing interest doesn’t mean you’ll be forced to migrate but it does give you the option of moving sooner rather than later if it suits your business to do so).

59 Responses

  1. Bloomin heck, I assumed that it would only apply to new sales transactions dated from the 5th, not backdated sale refunds!

    We sell lots of A/V tech, plenty in the £500-£1000 region. Time for a rethink.

  2. “Kerr-ching!” said a boffin at Paypal, blissfully ignorant of the impending customer revolt, ditching them in favour of other providers.

  3. Increasing prices (to accommodate the PP fee) on wonderful eBay?! Haha. Must be joke of the year.
    In our category it’s decreasing prices for past 14 months.

  4. I have been in dispute with PayPal for almost three months over goods not as described. I returned goods to China via royal mail tracked and insured. They have denied my claim and so I have lost approx £60 Inc return postage. So PayPal still support fraudulent traders.

  5. PayPal are an absolute joke. I cancelled my account after they tried to refund a customer despite them already being issued a manual refund by eBay (& proof provided). That would have seen me £1000 out of pocket. Don’t get me wrong, I got it sorted in the end but it took weeks!! Hours spent trying to speak to someone on the phone, being told different info each time! The threat of court action and in the end…. Twitter! Funny how they only responded and jumped into action after I put it out there on Twitter! Unfortunately though, they have a monopoly. I’m sure that will change in time… But how long do we have to wait for it and at what expense in the meantime?

  6. I sell digital goods online and I have had multiple people scam me stating that they haven’t received their goods. PayPal instantly refund them and now it will actually cost me money to do that! I am definitely going to look for a different option where PayPal is not included. If people want my products they will find a way to purchase them without PayPal.

  7. I think it’s quite bad when a charge will be made when you are due a refund people will stop using PayPal and closing accounts with them, PayPal should reconsider this Urgently.

  8. I think it’s quite bad for having to pay a charge for receiving a refund, people will stop using PayPal and closing accounts with them, PayPal should reconsider this Urgently.

  9. Ridiculous. Being charged because you received the wrong item or a broken item from a seller is unthinkable. The only person that should be paying any fees should be the seller. After sometimes waiting a month for your item and I’m being charged because something’s wrong with it it is preposterous. Time to stop using eBay and PayPal.

  10. Paypal just sucks..they rip people off..hold funds for no reason..they are the real scammers

  11. PayPal fees are already extortionate and to charge more again be goodbye not for me anymore rip off merchants

  12. I order online because it’s saves me from running around . Paypal realises that most people do not return incorrect orders. I have received broken or used items that I don’t have the time to repackage and mail. When the seller receives their defected item they sell it again. Purchasing unusable items is big business. Most purchasers pay and do not return. On several occassions out of many I call a report the product defect but I don’t have time to return so I keep the unusable item. Now I’m sure that they rebill me. Bad businesses are built around selling defected materials, sending incorrect sizes, products that do not look like their pictures. I now only reorder certain brands. I eat the rest. This policy will weed out those types of sellers. The good sellers send coupons so that u can order directly from them.

  13. I have been fighting with PayPal since Sept. 2019. Sent me five wigs that were not the ones I ordered. And would not send me address so I could send them back. Never got a receipt for what I did order .Finally got the address and sent them back. I never got my refund back, Am still fighting with PayPal. So as of now I am out the wigs and postage.
    Thank you, Sharon

  14. Pay Pal are a BUSINESS!! Which is JUST like some of the respondents in this conversation. But refunds for buyers don’t really figure?? And Pay Pal is a stand alone company (Even MORE SO in the very near future!) and as a Company I am pretty sure they have done the homework and run the figures and the logarithms!! ?. And this is there COMPANY DESCISION? Yes??
    And when ALL the multi million pound companies that Pay Pal provides their services for whatever?? Now if ANY of those companies ditch Pay Pal? THEN it will prove most of the above right!?! ?.
    Anyone taking bets??

  15. It’s just like PayPal expects everybody to pay for it we got packages sent to us that wasn’t even supposed to be with us and we got charged from PayPal it’s not it’s not right now it’s my phone PayPal should get their things straight instead of accusing people paying for something they didn’t pay for

  16. Its disgusting what PayPal are doing its hard enough for people to get refunds but PayPal to keep it SHAME ON YOU better rethink you will be losing loads of customers and you have brought it in yourselves

  17. Some of these replies are like readers letters to Viz, or can be read in the style of Vicki Pollard. Either some good trolling or some people who are very bad at understanding how online shopping works.

  18. eBay fees, PayPal fees, plus sales tax on all eBay sales in my state. Not even worth it anymore. Greed mongers.

  19. The very last statement says that only a layperson would think that all fees are borne by the buyer and not the seller. That’s the wrong statement as the buy utimately pays all the fees, directly or indirectly. Without the buyer, the seller has no way to get money for his products.

  20. A perfect crapstorm for PayPal. Sellers furious that fees are being withheld for returns, some buyers all up in arms because they aren’t aware of the full picture. No buyer will be out of pocket- it’s just the sellers who suffer but then again who am I to preach the truth and bang the drum for PayPal?
    The sooner we are out of PayPal the better- we are working on this now by removing them from our websites. As soon as is possible we will go to eBay managed payments

  21. I need to check the clarification for this, however does it only apply to sales that customers have refunded or item not received cases. If it doesn’t apply to item not received cases then surely sellers will be stating item shipped on their larger items and letting the customers claim back the long way?

  22. We removed PayPal from our websites months ago and we also don’t accept PayPal on eBay.

    It’s been hard going on eBay but it has given us time to refocus our stock on that channel whilst looking forward to their managed payments.

  23. PayPal keeping fees for returns, looks like either a desperate move from a failing business or a monopoly abusing its position.

  24. Stripe will be doing the same starting April 1st. It’s also virtually a guarantee eBay will soon do it with Managed Payments. Because why wouldn’t they? It’s not called GreedBay for no reason. All of these ecom and payment processing companies have almost no restrictions on the ways they literally steal money from customers. They’re allowed to do it and will continue to do so. That’s why they’re always coming up with more schemes. There needs to be government intervention and consumer protection laws to stop this. Doubtful that will ever happen though. Too much corporate greed and the government is on it too. It’s all about the money, they don’t care where it comes from. Crooks all of them.

  25. I use Paypal for business on ebay and my own website. And I’ve been exclusively using them on my website for nearly 10 years. As of today I will be ditching them on the website, and as soon as I can change to ebay managed payments, I will do so.

    Bad move Paypal.

  26. Government should step in to defend small business’s in this and make it illegal. Either that or we should be allowed to pass the charge back to the consumer (unless it’s faulty, not as described).

    And while the government are doing that they should make it illegal for marketplaces to choose an exclusive payment provider. It’s stopping competition. It’s like going to the Trafford Centre and you only being able to pay with Barclaycard or something. It’s ridiculous.

  27. I have heard that given the current circumstances paypal are waiving fees on refunds till 30th April … has anyone else seen this?

    I think the overall practice is a complete disgrace, surely distance selling dictates that all refunds are refunded including to the payment processor – NB are Paypal not regulated by the financial ombudsman? If so these firms are charged a fee (quite large) for each case brought against them, even if they win or loose hence everytime they hold their fees back on a refund if we all brought a case up withthe ombudsman it could be very very expensive for them – worth a thought

  28. @pete.
    Pete,fully agree with your niew my friend! Have my own personal problem with both eBay and PayPal over returning Counterfeit items to China. And at MY EXPENSE??!! ?. But the DSR’s only applies to UK transactions and as I now realise a lot of people on here are NOT in the UK I fear??
    But your premise is of course 10%correct!! And I for one do support any action that helps these US companies to appreciate that US rules are NOT applicable to the UK ??. ???.

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