|Tue Dec 14 2010 21:25:51|
PayPal to Let Top Buyers Pay for Items After Delivery
By: Ina Steiner
PayPal is testing a "Pay After Delivery" program in which some members of its top-buyer program can pay for items 2 weeks after making a purchase and after they have verified receipt of their goods. The program applies to all PayPal purchases, not just on eBay.
The benefit applies to certain members of its PayPal Advantage program, which gives PayPal top buyers benefits such as dedicated, senior support-agents and faster dispute resolution; buyers must spend $5,000 in the past 12 months to qualify as a PayPal Advantage member.
On Tuesday, a buyer who is part of the PayPal Advantage loyalty program posted in the eBay forums a letter they received from PayPal about the Pay After Delivery program:
As a member of PayPal Advantage, you have early access to some of our newest products and services, before they're available to the rest of the PayPal community. You're invited to try Pay After Delivery, a brand new feature that allows you to get your order and make sure it's right - before you pay.
Here's how it works.
1. Checkout as usual, but choose Pay After Delivery as your payment method. PayPal pays the seller upfront, so there's no delay in shipping and no money is deducted from your account.
2. Receive and verify your purchase. If you have any problems let us know in our Resolution Center.
3. If you're satisfied, that's it. We'll automatically withdraw the money from your bank account 14 days after your purchase."
To add Pay After Delivery as a payment method in your account, simply make a purchase using PayPal and accept the offer shown to you during checkout.
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.)
PayPal is only offering the Pay After Delivery program to Top Buyers, people who spend thousands of dollars with the company each year, and it accesses their bank accounts to withdraw the money owed it.
Sellers are likely to be concerned upon hearing about the Pay After Delivery program.
1) Will sellers have to send items before being paid?
No - in the letter above, PayPal says it pays the sellers upfront.
2) Will buyers be more likely to return items since they haven't yet paid for them ("try it before you buy it"), and if so, will PayPal make it easy for them to change their minds about purchases?
This is a bit difficult to answer. However, PayPal already extended its buyer protection to all transactions on or off eBay last month, so sellers are already at risk if buyers express dissatisfaction (Item not Received or Significantly Not as Described).
Nevertheless, the fact that the seller or merchant has no control over the Pay After Delivery program may be disconcerting.