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).