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Fri June 11 2010 11:02:15

PayPal Raises Merchant Fees for Refunds and Chargebacks

By: Ina Steiner

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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.




Comments (99) | Permalink

Readers Comments

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Lies, Damnable Lies

Fri Jun 11 11:18:36 2010

Are you serious? eBay is encouraging returns to buyers, and now they are going to make .30 cents per transaction?!? We are officially in Hell...

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Pat

Fri Jun 11 11:40:56 2010

Looks like my handling fees just went up to cover the cost of refunds and chargebacks.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Troglodyte

Fri Jun 11 11:47:25 2010

Deduct the thirty cents from the customer's refund.

Enough is enough.

Ebay continues to profit from aiding and abetting buyer fraud and postal fraud.

Enough is enough.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: kw

Fri Jun 11 12:00:24 2010

Do I understand this change?  Ebay requires sellers to offer Paypal.  Ebay encourages buyer refunds and chargebacks by their abusive seller policies.  Now they want to collect more money from sellers through Paypal without actually calling it a fee increase.  On top of all that ebay takes away fee discounts for low DSRs left by the same buyers who got refunds or initiated a chargeback.  Whew ... glad I left ebay a long time ago! They are a management and shareholder money machine.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: NCWood

Fri Jun 11 12:00:27 2010

Troglodyte,

I just mentioned this to my TS Rep and she told me that if we do that we are in violation of  our eBay agreement by  forcing the customer to pay our fees.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Susan

Fri Jun 11 12:06:53 2010

Every time it happens to me, I will file a report with the better business bureau.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Troglodyte

Fri Jun 11 12:09:22 2010

@ NCWood

Then charge $1.00 and call it an administrative/restocking fee.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Quicksilver Messenger This user has validated their user name.

Fri Jun 11 12:12:00 2010

And the eBay/PayPal fee hike beat goes on and on and on...
Enough already!

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: takin up the

Fri Jun 11 12:13:25 2010

 I have to refund often now. Always for the photo and the customers thinking the shade was too light or so on...my colors are correct. I must kiss the buyers bottom to stay a top seller or get stuck not even seen on the day they turn the water  on. Now I must add on this cost and we all know they expect a lot of returns and that is a reason for this new way to screw us.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: old timer

Fri Jun 11 12:16:57 2010

For partial refunds, it sounds like the same as today.  So no change there.  But what about those situations where an eBay buyer purchases multiple items from a seller and pays for them by individual PayPal payments?  It used to be that the seller could refund the payments and then send a consolidated invoice for the buyer to make one PP payment, avoiding all of the excess 30 cent transaction fees.

Of course, if eBay had a bloody functional shopping cart to properly handle multiple purchases, this wouldn't be a problem.  But wait, eBay doesn't have a cart even though they have told sellers that they were working on it for YEARS.  Good grief, I think the US space program managed to put a man on the moon in less time than it is taking eBay to provide what is now a basic e-commerce service!

Still, I'm happy that I have been making progress in moving my business (and sales) off eBay.  So less fees to eBay.  Unfortunately, I'm having less success in convincing my customers to use something other than PayPal.

Add goal to 2010 plans -- set up direct credit card payment program.

PS - It would be a bit less insulting, of course, if eBay allowed sellers to use another payment program instead of PP.  Yes, there are a few other options, but nothing as good as checks, MOs, or Google Checkout.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: unusual1 This user has validated their user name.
Web Site

Fri Jun 11 12:17:37 2010

Those of you that insist on staying on ebay should at least try and help yourselves even a little bit. Take your own credit cards and deny ebay/paypal the money. You can use your own gateway i.e. Authorize.net, etc. or invoice the buyer with Amazon checkout and Google checkout. Since you are not taking ''paper'' payments but credit cards it is not against policy. If you have your own website this should already be in place. And, get rid of paypal if it is on your website.
You cant say Google or Amazon checkout BUT you can say invoice for credit card payment from your CC processor.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Just me

Fri Jun 11 12:45:04 2010

old timer- You said ''For partial refunds, it sounds like the same as today.  So no change there''
The majority of my refunds are partial refunds but I don't see mention of these not being included. Is that stated somewhere?

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: msfrugalady

Fri Jun 11 12:45:43 2010

TO:  takin up the  - To avoid returns due to color-shade differences, I state in my listing-description:  Color(s) of Actual Item may not be exact color-match as shown in Photos. Lighting & Angles may affect display of Actual Colors of Item(s).

This may or may not work - all depending on what type of items are sold, whether an "exact" color-match is needed.

FEE$ FEE$ & MORE FEE$ make me increase my prices to "cover" the fees - of course Paypal & Ebay get more money if it sells.  

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

This user has validated their user name. by: Stockmiser

Fri Jun 11 12:46:03 2010

This really sucks - but it's not unusual for the industry...

FYI...

Google checkout has always retained the .30 fee for refunds.

Authorize.net not only keeps the lower .10 fee, but charges you an additional .10 fee for the refund.  You are also charged a .10 fee if a card is declined.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Silver.horse@ymail.com

Fri Jun 11 12:46:05 2010

I guess J.D. is done ruining eBay. Now it's Paypal's turn. Wow. I have a Paypal shopping cart on my website, I guess it's time to dump them.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: andanotherthing

Fri Jun 11 12:49:49 2010

In the UK, we have legislation against Agreements in Restraint of Trade, and also the Unfair Contract Terms Act 1977 (as amended).  Both eBay and Paypal in the UK are sailing extremely close to breaching these bits of legislation..... I can see a ''class'' action coming.

Paypal is also either breaching or very close to breaching the terms of the Financial Services Act 1986 (as amended) with regard to some of its charge backs, refunds or withholds in the UK, or even its general non-communication policy.

It will be very interesting to watch (perhaps to participate).

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Hardrock Rules

Fri Jun 11 12:59:47 2010

F U Pay Pal and eBay !

# 1 and # 2 Most Hated Sites on the Internet !

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Hardrock Rules

Fri Jun 11 13:01:40 2010

ATTENTION SELLERS ! If you use Pay Pal on any other websites or your own, and sell on eBay GET RID OF PAY PAL ASAP ! They will count those buyer complaints against your status on eBay !

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: Paul

Fri Jun 11 13:13:18 2010

Don't know what everyone's so shocked about... I've been on ebay from the get go (14 years) and I have yet to see a 6 month period go by when they didn't dream up SOMETHING new to screw sellers over... And yes, they are practically BEGGING buyers to file 'complaints' against sellers to get refunds, this enables them to lower a sellers 'score' and avoid giving the discounts they promise us honest ones... It's all a crock and always has been, most likely always will be... I'd pay the devil himself with my own blood to have a newer/better option than ebay come along to sell my stock, but again, been waiting for many years, tried many other 'upstarts' and have yet to have one work out. Heck, I have 450 items posted on a newer site than ebay - at 1/2 the price of my ebay items and for TWO YEARS NOT ONE SINGLE SALE... It's just pathetic that ONE e-commerce site should have this much power and pull.

PayPal Raises Merchant Fees for Refunds and Chargebacks   PayPal Raises Merchant Fees for Refunds and Chargebacks

by: My Own Website Not Quite Paying My Bills Yet

Fri Jun 11 13:16:44 2010


And the hits just keep onnnnnnn coming!

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