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Fri June 3 2011 16:00:37

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

By: Ina Steiner

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PayPal ended its relationship with Alibaba's AliExpress wholesale marketplace after just one year, and a document reveals PayPal wanted to charge 7% fees for processing certain AliExpress transaction payments - much higher than the 2.9% - 3.9% fees it charges for China cross-border transactions.

PayPal entered into an agreement with AliExpress in April 2010, and today announced PayPal would no longer be a payment option on AliExpress after August 3rd. See today's AuctionBytes news story.

A document obtained by AuctionBytes reveals that PayPal was unhappy over a "dramatic increase" in North American consumers using AliExpress and told the B2B marketplace it would begin charging 7% fees on transactions involving personal consumer PayPal accounts. PayPal doesn't typically differentiate whether the sender is a consumer or business.

A possibility as to what might have spurred PayPal to withdraw from AliExpress is that consumer transactions could be more costly in cross-border trading: a larger volume of lower-value transactions with a potentially higher risk of claims than from resellers.

PayPal is training North American consumers that it will protect them from "Item Not Received" claims and items received but significantly different from what was described by the merchant across all marketplaces. PayPal is able to do this by shifting a lot of risk to merchants - eBay sellers in particular are aware of PayPal holds and reserves on their accounts. I'm not clear on whether PayPal was able or willing to impose some of these risk management techniques on AliExpress suppliers, or whether higher fees satisfied its risk management criteria.

Whatever the case, it's interesting that more consumers are going directly to Chinese suppliers for their purchases.




Comments (17) | Permalink

Readers Comments

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: anyone out there

Fri Jun 3 16:45:45 2011

Question??????

If paypal is the scum of the world, why would anyone use them when buying from Chinese suppliers when the Chinese suppliers take Visa and Mastercard.

My Chinese supplier takes Visa. I have done business with them for years and have never had so much as a slight glitch.

Paypal has been a constant source of glitches and holds.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

This user has validated their user name. by: Ric

Fri Jun 3 16:47:21 2011

Once again eBay corporation's ignorance and greed combine to make another stupid self defeating policy decision.

As an eBay seller, I purchase parts through AliExpress which in turn are resold on eBay. Payment for these purchases were handled through PayPal.

When sold, these purchases were generating fees for eBay as well as PayPal as the items were listed for sale here.

PayPal mistakenly sees me as a consumer making purchases on AliExpress which they mistakenly believe might have been made through eBay. That is simply not the case, as eBay does not have pricing that allows for wholesale purchases for later resale.

PayPal made a smart move when they partnered with AliExpress, as they were getting a cut of every AliExpress transaction I completed which otherwise had been processed using a credit card.

Now, I will simply complete my AliExpress purchases via credit card, and PayPal loses the revenue they otherwise would have earned. Additionally, future AliExpress wholesale purchases we make will be completed with marketplaces other than eBay as our outlet for retail sales of this inventory.

eBay corp's decision cuts them out of the transaction fees on the wholesale purchase, and they will now lose listing fees, final value fees, and PayPal transaction fees as we will no longer offer products sourced from AliExpress on eBay. Instead, we will retail these products exclusively on alternative web sites where we accept Google Checkout and not PayPal for payments.

That PayPal is willing to sacrifice this revenue is one of the most shortsighted greed driven decisions the company has ever made.

Instead of being grateful for the transactional volume generated while another venue handled all the transactional details, eBay corp plays the greed card and cuts their nose off to spite their face.

Another stupid move by a company that acts as their own worst enemy.



PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: MR ME

Fri Jun 3 17:37:32 2011

Looks like ALIEXPRESS was taking the Chinese trinket business away from PayPal's Mommy. eBay ... shame on you , slap  slap !
If you cant beat 'em...gouge 'em!.
Do I detect a little conflict of interest ?

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: My Own Website Not Quite Paying My Bills Yet

Fri Jun 3 18:53:04 2011

Only 7%? Paypal must have felt generous that day.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

This user has validated their user name. by: Ming the Merciless

Fri Jun 3 19:01:52 2011

There's just no honor among thieves anymore.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

This user has validated their user name. by: Philip Cohen

Fri Jun 3 21:14:06 2011

PayPal's insurmountable problem is that they don't know, nor can they ever really know, the entities at either end of the transaction (unlike the banks) and therefore PreyPal's financial risk management is undoubtedly an ongoing nightmare for them.

Oh, happy days!

All anyone needs to know about the clunky PayPal:
http://forums.auctionbytes.com/vbulletin/showthread.php?p=165263

Is that PayPal’s blood in the water, and are those “sharks” (oops, “banks”) I can see circling?

Enron / eBay / PayPal / Donahoe: Dead Men Walking.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: Smitty This user has validated their user name.

Fri Jun 3 21:39:35 2011

Man, that was sure a short romance. John & Jack's affair didn't even last 9 months but I never gave it high hopes.

John is a Bain Brain? but Jack is a up by the bootstraps kind of dude. Meg dumped over a billion trying to best Mister Ma in China.

John will learn how it goes soon enough.

Smitty

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: Slightly off topic

Fri Jun 3 23:12:27 2011

Re:
"Alibaba Bans DVDs and CDs from Wholesale Marketplace" June 03, 2011  

Wow! That's some disruptive innovation  

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

This user has validated their user name. by: Ming the Merciless

Sat Jun 4 00:51:02 2011

@ Smitty

John has now learned how the fortune cookie crumbles and the message read, "You Lose!"

@ Slightly off topic

Too many bootlegs. The Chinese selling them on Alibaba will simply sell them on ebafia if they're not already.

No marketplace can really afford to ignore counterfeits and bootlegs because of the already lurking possibility of credit card charge backs.

This is why PreyPal has been casting about in the last two years desperately devising ways to transfer as much liability to sellers and to collect payments that bypass the credit card companies like Bilk Me Later, e-checks, and bank transfers.

Ebafia/PreyPal's chronic ongoing insanity is why cash rich ebafia has never declared a stock dividend -- something analysts are beginning to catch on to.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

This user has validated their user name. by: Tula

Sat Jun 4 01:40:00 2011

@anyone out there:
Many of the AliExpress sellers are smaller wholesalers who only take Paypal.

I'm kind of wondering if Alibaba's new payment system, AliPay, might have something to do with this, as well. After all, what do they need with Paypal if they can route everyone through their own payment system (just like eBay does with Paypal). I'm guessing Paypal probably isn't too keen on this new service.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: Rich

Sat Jun 4 02:36:34 2011

I wouldn't say it's interesting more consumers are buying direct from China suppliers; I would say that it sucks.  So I would commend Paypal for dropping this China company.  America better wake up and begin buying local or buying made in America.  It's not rocket to know that taking our American money and buying Chinese products means that the bulk of our money ends up in China. This is good for China and bad for America.  Good move by Paypal.  

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: skin and bones.

Sat Jun 4 11:12:47 2011

@ slightly off topic

Re:
''Alibaba Bans DVDs and CDs from Wholesale Marketplace'' June 03, 2011  

Wow! That's some disruptive innovation.

This is a good move, but it's a drop in the bucket. The Chinese are busy stealing our weapons systems, our computer programs,  artwork and counterfeiting medicine.
On the other hand, I buy products made in China. it's too late.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: Patricia This user has validated their user name.

Sat Jun 4 11:55:00 2011

LOL competition is closing in so Ebay/Paypal tries to grab all they can while they're still the big fish in the pond.

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

This user has validated their user name. by: Anonymous Annie

Sat Jun 4 15:09:34 2011

This appears to be a symptom of the same myopic greed that is the cause of so many other eBay/PayPal problems.

Because they were dissatisfied with the opportunity of having MANY ''small-portions'', they appear to prefer having NO ''large-portions'' instead.

Well, good-for-them, I say! Kudos to PayPal for sticking-to-their-guns and holding out until they get ALL of nothing.

What an impressive victory that is. Quite a feather in their cap, eh?

What boneheads!

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: Steve

Mon Jun 6 06:52:30 2011

Donahoe sounds like the big baby who, when he doesn't get his way playing in the sandbox, picks up his toys and goes home.  How do you so arrogant brat in Chinese?

Ebay consantly bites the hand that feeds it. The feud with Google comes to mind.  So eBay, how many of your listings are showing up on Google these days?   LMAO

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: gcarr
Web Site

Mon Jun 6 08:15:09 2011

Alibaba BS was ended by PP becuase of so many Chinese fakes not being able o return.
It is rare to see anything on ALIBABA that is not a cheap fake POS
Alaibaba sells garbage ! ! !

PayPal Wanted 7 Percent for Consumer Transactions on AliExpress   PayPal Wanted 7 Percent for Consumer Transactions on AliExpress

by: Syb

Wed Jun 8 18:46:22 2011

Thx gcarr - you cant just charge 4% on transaction when more than half are going to have snad problems. Maybe 7% is what paypal needed to cover all the problems and still make money. I think it was a smart thing to do. Aliexpress is just the wild west all over again



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