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Mon June 13 2011 17:36:02

PayPal Policy Change Could Cost eBay and Online Sellers

By: Ina Steiner

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PayPal is giving merchants another reason not to like eChecks. eBay's payment-service unit is amending its User Agreement, and it could cost eBay and other online merchants more money in fees.

PayPal is removing the " Purchase Payment Fee cap" for sellers who receive eCheck payments. Currently, the Purchase Payment Fee for eCheck-funded payments is capped at a maximum of $5.00. After July 12, this $5.00 cap will no longer be applied. (This page references the $5-cap, I am contacting PayPal to learn more about how these fees are calculated.)

In the old days, merchants could block eCheck payments funded through PayPal, but no more. Online merchants cannot tell buyers which funding source to use. And in fact, we've written about the fact that sometimes buyers are taken by surprise in cases where PayPal has used an eCheck to pay the merchant for their purchases.

Merchants generally don't like eChecks since it comes directly from the buyer's bank account and, just like a regular check, it usually takes between 3 and 5 business days for an eCheck to clear and the money to appear in the recipient's PayPal account (see PayPal FAQ).

You may not get a lot of payments funded by eChecks, but when you do, it sounds like they could take a bite out of your profits!




Comments (22) | Permalink

Readers Comments

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: anyone out there

Mon Jun 13 18:45:58 2011

In 12 years of being a seller on Fleecebay I have never had a problem with an e-check.

You either adapt to the changes until those morons in Washington decide to do something about Pigpay or you go out of business.

Me I would rather adapt as I will be dead long before the morons in Washington do something.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

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

Mon Jun 13 18:53:39 2011

I wonder how much this will improve PayPay's bottom line? What will they gain in the course of a year? I have a difficult time believing that this is a significant dollar amount for PayPay... so if they're trying to squeeze a little harder to get these few extra drops blood from Sellers, perhaps their reason for doing it is to compensate for a hemorrhage elsewhere in the company.

Are too many non-eBay sellers DROPPING PAYPAL as a payment option?

I did.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

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

Mon Jun 13 19:02:58 2011

I’m surprised that the clunky PreyPal has not used “eChecks” for all payments sourced from buyers’ banking accounts, seeing as they have been in the habit of immediately (and irresponsibly) telling the seller that the buyer has paid (via a PreyPal direct debit on the buyer’s account) even before the buyer’s bank has confirmed whether or not the buyer has sufficient funds in the account.

I suspect that this removal of the fee cap is in preparation for such a move to eChecks. In such circumstances, PreyPal is probably going to use eChecks for all payments where funds are sourced from a bank account and not make those funds available for “x” days until they are cleared and, naturally, PreyPal does not want to lose the percentage commission on purchases that it has otherwise been used to charging merchants.

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

All you need to know about the criminal facilitator eBay:
http://forums.auctionbytes.com/vbulletin/showthread.php?t=23540

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

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: pete

Mon Jun 13 19:27:25 2011

We ship Worldwide and almost all our eChecks are from US Paypal accounts?

Around 10% fail, mostly due to banking funds.

2-3 years ago around 20-25% failed

This is just another eBay Inc fee grab nothing more as Paypal could very easily do what Amazon do ....no cleared funds NO goods

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Penny Auctions
Web Site

Mon Jun 13 19:27:56 2011

I thought the e-check funding was the option chosen by our provider. I did not know that it was a self impose choice by Paypal. It takes forever to get the money.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: reader107213

Mon Jun 13 20:03:57 2011

According to TOSback.org, Paypal has changed the user agreement 172 times since June 10, 2009. (not including this change.)

Is that 'normal'?


http://tinyurl.com/ybqx7fk
http://preview.tinyurl.com/y
bqx7fk

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

This user has validated their user name. by: Ric

Mon Jun 13 21:34:04 2011

There is no end to the money grab at eBay/PayPal.

I guess with Visa, MasterCard, American Express and big banks entering the electronic payment market, the company figures they need to grab all the fee revenue they possibly can before the competition knocks them down a few pegs.

Yet again, we have an example of the disconnect that exists in San Jose, this is what happens when your executive ranks are filled with multi millionaires who have lost the ability to comprehend what their customers think about their company.

Right now the millionaire club in San Jose believes eBay/PayPal is invincible, that competition will have no impact on their business going forward.

What they fail to comprehend is how ready their paying customers are to jump ship and switch to the competition as soon as their services go live.

People are not looking to walk away from eBay/PayPal, they are looking to run away. As soon as the variety of payment options catches up with marketplace options, the stampede will be on.

They will never stop to think that their own money grabbing policies are what has everybody lined up at the starting gate ready for the race to start.

Two years from now, John Donahoe and Robert Swan are going to be doing their Butch Cassidy and the Sundance Kid impression as they look at the companies that have drained their business and say "Who ARE those guys?".



PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: JB

Mon Jun 13 23:17:23 2011

Pay-Pal -vs- Cow Dung, a no brainer

What Killed EBAY (& the Internet Auction)?

http://www.ritholtz.com/blog/2011/06/what-killed-ebay
/

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: rich

Mon Jun 13 23:44:03 2011

e-checks suck; no seller likes them.  The added fees probably only affect high priced items only.  Sellers should be given the choice of accepting e-checks or not accepting.  Ebay fees are way too high; I think Paypal fees are very reasonable.  The problem is the Ebay fees

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Chaz

Tue Jun 14 00:06:29 2011

I noticed this new policy when logged onto paypal today.  Echecks aren't the same as credit cards and don't carry the same type of fees, so paypal is not justified in charging anything but a convenience fee for getting an echeck rather than a paper check.  I would refuse echecks if I could since those buyers generally resent that they have to wait to get their item, and, critically, the ebay invoice uses the sale date, not the payment cleared date, on the invoice.  Even with an ink explanation (which is inconvenient), to many buyers it looks like a late delivery.  Also I don't think ebay gives sellers the same guaranteed 5 star on 1 day shipping for echecks as credit card paypal payments.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

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

Tue Jun 14 00:37:46 2011

When the big banksters start cutting into PreyPal's profits, PreyPal will offer still more incentives to buyers to use e-checks and Bilk Me Later rather than funding their purchases with a credit card.

This approach would likely diminish ebay sales, but at this point in time The Ho is far more interested in PreyPal's profitability than in ebafia's profitability anyway.

These are sleaziest executives in corporate America.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: So tired!

Tue Jun 14 01:31:06 2011

OMG! Thanks to this post I just realized that I've been qualifying for a special Merchant Rate for about 2 years and they never informed me about it. I was paying 2.9%+0.30cents transaction fee, while during all this time I qualified for 2.2%+.30cents. Why do we have to apply for that special lower rate? Why didn't they adjust it automatically in the moment my monthly sales reached the required level? How much money did they steal from me? I'm disgusted!

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: MR ME

Tue Jun 14 09:37:44 2011

Just waiting for Visa to roll out their payment service, then ADIOS Paypal .... I have a feeling that a very large percentage of Paypal users will do the same !

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Moonwishes
Web Site

Tue Jun 14 11:10:09 2011

I don't know why people whine about not knowing what Paypal uses for a funding source when they buy through them. It is right there on the screen to decide how you want to pay. It is right there with the buyer's address that when the package comes back as no such address the buyer gets mad at you because they had forgotten to change it. I don't like getting echecks in my ecrater store, but thankfully I only get about 5 a year. I don't know how this fee change would impact me, but hope it isn't by much.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

This user has validated their user name. by: Ina

Tue Jun 14 11:29:37 2011

Moonwishes, interesting that you shared how many PayPal echecks you get - what payment methods do you like best on your eCrater store?

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Paul

Tue Jun 14 12:20:21 2011

QUOTE: by: anyone out there
       
Mon Jun 13 18:45:58 2011
In 12 years of being a seller on Fleecebay I have never had a problem with an e-check.


I must disagree here - I've had NO LESS than 7 E-Checks 'bounce' in the last 6 months alone.
I HATE getting them and would just as soon block all transactions from accepting them - And as someone said, I've had several buyers tear ME a new one because PAYPAL converted their payment to an e-check without their knowledge of it happening and then they are P.O.'d at ME for not shipping the item same day as bought as all my ads guarantee....

THANK GOD I FINALLY gained approval in my particular category of sales items by the River - adios ebay AND Paypal very shortly here after 15 years of suffering under their Gestapo like tactics!

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Tired of eBay's Bullsh*t This user has validated their user name.

Tue Jun 14 13:56:11 2011

@ reader107213 :: "According to TOSback.org, Paypal has changed the user agreement 172 times since June 10, 2009. Is that 'normal'?"

Yep, that's 'normal' for eBay/Paypak; they think that a couple hours of your time EVERY WEEK is a-ok for staying abreast of their policy changes.

--

@ Chaz :: "Echecks aren't the same as credit cards and don't carry the same type of fees, so paypal is not justified in charging anything but a convenience fee for getting an echeck rather than a paper check."

I agree. But, as we all too well know, Paypal and eBay decide what they are "entitled" to.

It has long bothered me that Paypal does not appropriate its cost accurately, and pushes buyers to use the method that benefits Paypal the most. Remember when changing your payment method as buyer from ACH to CC involved traversing about 4 Paypal screens?

--

eBay has royally screwed up its selling platform, so now eBay will be relying more and more on Paypal in the coming years.

Paypal has had something of a stranglehold on small sellers, so, no doubt, eBay sees this as a cash cow going forward (since they have driven so many sellers off the platform in the last two years).

I doubt that Visa/MC etc gonna be necessarily better -- except that at least then PP will have some competition, to keep their greed in check.

I've been using Google Checkout (for non-eBay sales) for a few months, and I like GC a lot more than PP. When somebody pays using GC, GC automatically transfers the funds via ACH into my checking account within ABOUT TWO DAYS. Compare that with about a week for transfers from Paypal (plus the need to set up the transfer manually) and you can see just how more convenient GC is for actually getting your funds.

- Tired of eBay's Bullsh*t

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Not making money
Web Site

Tue Jun 14 15:13:02 2011

I have been struggling with PayPal's antiquated button design system for years and to date have not gotten more than a few sales through PayPal. Now I have added Google Checkout to my lineup. I don't use the invoicing process at all, but this policy change does not really matter because I have opted only to receive the funds in my account and then withdraw from it from time to time. If PayPal starts issuing eChecks for withdrawals I'll drop it like hot potato. I don't need the aggravation.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Oh my

Tue Jun 14 16:41:37 2011

To: anyone out there

What do you mean?  If you think the GOP cares about regular folks selling on marketplaces think again.  The Consumer Protection division of the FTC will have some oversight but the GOP want it gone.  

Regulation will not happen as long as we keep electing those idiots who think simple oversight and fair rules governing trade for all are not right and we should have a free for all system where winner takes all and the invisible hand will fix all.

I run a very successful company but I do not believe business works without set rules that are enforceable.  Regulations existed when this country grew and other countries have them, so what's wrong with the GOP where they won't accept regulatory agencies keeping an eye on those who play the game?  Regulations are like rules in a sports game.  Without rules and refs, the games are rigged.

PayPal Policy Change Could Cost eBay and Online Sellers   PayPal Policy Change Could Cost eBay and Online Sellers

by: Oh my

Tue Jun 14 16:43:01 2011

Can we stop whining about Ebay and how unfair it is?  I agree it's not fair but nothing will change as long as people keep voting for anti-regulation GOP politicians.  Sorry, regulations that keep things fair are good.  

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