|EcommerceBytes-NewsFlash, Number 3301 - April 14, 2014 - ISSN 1539-5065 1 of 3|
PayPal has expanded a controversial program to the UK. The "Pay After Delivery" program lets shoppers pay for purchases 2 weeks after hitting the buy button - and funds are taken from the buyer's bank account on file rather than from funds available in their PayPal account.
In a recent letter to select UK members, PayPal positioned the program as a way shoppers could feel more secure when shopping online, starting off its letter with the following introductory verbiage:
"We're always looking for ways to give you extra peace of mind and make you feel more secure when you shop online. That's why you can now choose Pay After Delivery at checkout.
"With Pay After Delivery purchases, we'll pay the seller straight away but will only request the money from your bank account 14 days later. This gives you the time to receive the item before you pay. If the item doesn't arrive or isn't what you expected, you're covered by PayPal Buyer Protection."
Sellers have criticized the program, feeling it promotes a "try before you buy" mentality and fearing it will lead to an increase in returns. A UK reader who received an email promoting the Pay After Delivery service last week expressed his concerns to EcommerceBytes, writing, "Looks a bit suspect to me - what benefit is this as there is always the guarantee? Makes a simply method of payment more complicated than it need be and will lead to more returns as buyers regret buying (buyer remorse)."
Buyers also have concerns about the program. A U.S. reader recently reported PayPal had opted him into the program without his permission. "I just accepted a second chance offer on eBay and after I accepted the offer and made payment I got a payment confirmation email from PayPal that said I had selected to PAY ON DELIVERY and the funds wouldn't be taken out of my account for two weeks."
He wasn't pleased since he had funds available in his PayPal account, and wrote, "I can't find any way to opt out of the delayed payment, it just seems to be forced on you now."
EcommerceBytes first wrote on the PayPal Pay After Delivery program in 2010 on the AuctionBytes Blog when PayPal began testing the service on top buyers. The blog post addressed some concerns of the program and noted it helped PayPal save money and gave it more control in the case of disputes between buyers and sellers:
"There are several benefits to PayPal in offering such a program. The first is to encourage top buyers to spend more. Psychologically, if they aren't paying when they purchase items, they may be inclined to spend more.
"Secondly, PayPal moves the transaction to an ACH transaction, which cost PayPal much less than credit card processing. In addition, PayPal then has complete control over the dispute process. (When using credit cards as a funding source, buyers have the option of disputing transactions or filing chargebacks through the credit card companies. And since PayPal also offers seller protection, it wants to be the sole arbiter of disputes.)"
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to email@example.com.
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