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PayPal Exempts Large Retailers from Fee Hike

PayPal is raising fees by up to 32% by eliminating volume discounts for larger sellers, and EcommerceBytes has confirmed that certain companies are exempt from the fee hike, which the payments company is referring to as a fee “simplification.”

PayPal spokesperson Anuj Nayar told EcommerceBytes, “We are only changing the rate structure for merchants on the volume discounted merchant rate. We are not changing the rate structure for other groups.”

And, he further clarified, “Merchants with negotiated contracts (such as the Home Depot that you mention in your story) will not have their rates changed.” Nayar was referring to Friday’s Newsflash article about the new fee changes.

Nayar said about 1% of PayPal’s merchant base would be affected when the changes go into effect on October 1st. As we explained in Friday’s article, PayPal is eliminating its volume discounts. Currently PayPal charges 2.9% plus 30 cents per transaction, and those with over $3,000 in monthly sales volume receive a rate of 2.5% plus 30 cents per transaction. Those merchants with monthly sales over $10,000 receive a rate of 2.2% plus 30 cents per transaction.

As of October 1st, all merchants will pay 2.9% plus 30 cents per transaction except for large retailers that enter into special deals with PayPal (known as diamond powersellers in eBay-speak).

Nayar told EcommerceBytes in an email, “We are simplifying our rates to have one published standard rate versus tiered volume rates. 2.9% is standard across the industry for payment processing but PayPal offers value added services as part of the rate, such as seller protection, credit and new innovations such as One touch. Seller protection alone can protect our merchants from fraud that can analysts say can cost merchant $279 for every $100 loss.” Nayer included a link to a study by LexisNexisabout the cost of fraud.

On Thursday, the same day PayPal notified sellers of its price hike, eBay sent an email to some users informing them it was banning sellers from offering ProPay and Skrill in their listings on its marketplace, giving sellers little choice but to accept PayPal on the marketplace.

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Ina Steiner
Ina Steiner
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 ina@ecommercebytes.com.