|Fri June 11 2010 11:02:15|
PayPal Raises Merchant Fees for Refunds and Chargebacks
By: Ina Steiner
Online merchants will pay more in fees to PayPal beginning in August thanks to changes the company is announcing today. Beginning August 10, when a U.S. or Canadian seller issues a refund, PayPal will retain the 30-cent transaction fee it charges, a move sure to be highly controversial.
PayPal charges merchants a 30-cent transaction fee plus a percentage of the amount of the transaction, typically 2.9%. PayPal had always credited merchants for 100 percent of the fees for transactions in which the merchant refunded the buyer, meaning that the new policy is, in effect, a price hike.
The change will have a major impact on eBay sellers since the marketplace is increasingly pressuring sellers to accept refunds due to its Buyer Protection policy. Since sellers often complain of being victimized by abusive buyers who advantage of eBay's protection policy, something CEO John Donahoe has talked a lot about lately, many eBay sellers are likely to feel this new policy change by Paypal is adding insult to injury.
PayPal is also hiking the fees charged to merchants by chargebacks. Beginning August 24, eBay will double chargeback fees from $10 to $20 (U.S. merchants only, eBay merchants enrolled in the PayPal Preferred program are exempt).
And on July 13, PayPal and American Express will enter into a new card processing arrangement that requires merchants to establish a direct contractual relationship with American Express - this only applies to taking American Express credit cards directly.*
A PayPal spokesperson told AuctionBytes, "It has been more than a decade since PayPal has made a broad increase. Our focus remains to offer competitive services within a simple fee structure - no hidden fees - (gateway fees, monthly statement fees, web access fees, address verification fees, downgrade fees, etc)."
* Edited to Add: The American Express arrangement concerns only Website Payments Pro and Virtual Terminal merchants. eBay transactions will continue to pay current PayPal prices for AmEx.