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Sun Mar 18 2018 20:20:35

eBay Sellers Worry over Changes to PayPal Protection

By: Ina Steiner

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eBay sellers are concerned about PayPal's decision to withdraw protection for certain types of transactions as part of changes to the PayPal Seller Protection policy next month. It doesn't affect all transactions, only those in which the buyer pays without being logged in to PayPal.

*See important update below.

In an announcement to sellers this month, PayPal stated: "We're updating the additional requirements for coverage of Unauthorized Transactions for sellers under our Seller Protection program to require that the payment must have been made in connection with a transaction where the buyer logged into their PayPal account to complete the transaction in order for sellers to be covered under the program."

Some sellers are asking if they would be able to prohibit buyers from paying without being signed in to their PayPal account. (That seems most unlikely.)

One EcommerceBytes reader who had concerns about the policy change raised an interesting point: "How would the seller know whether the buyer logged in, or not, if PayPal denied coverage for a transaction?"

The change in policy is likely related to eBay's transition to a payments intermediary, which starts on a very small scale in July; eBay and PayPal recently signed a term sheet outside of the 5-year operating agreements the two companies entered into in 2015.

To take a step back, when you go to checkout on eBay, you generally see three options: pay with PayPal, PayPal credit, or Credit or debit card. But PayPal handles all aspects - the "branded" (PayPal), and the "unbranded" (credit or debit card). Until eBay becomes the payments intermediary, PayPal is processing both types, branded and unbranded (except in cases where the merchant offers its own credit card processing).

So in other words, PayPal is withdrawing seller protection from this "unbranded" type of transaction. 

PayPal CEO Dan Schulman explained last month, "The "private-branded" processing is highly undifferentiated, it's commoditized and as a result it yields little to no profit. And as we go through this, we are going to be able to shed substantial cost because we aren't going to be doing that "unbranded" piece of it."

Why would it be less profitable for PayPal to process credit and debit card funded transactions? PayPal explains right in its Form 10K filing with the SEC: it pays higher transaction fees when consumers fund payment transactions using credit cards. It pays lower fees when consumers fund payments with debit cards, and it pays "nominal" fees when consumers fund payment transactions by electronic transfer of funds or from an existing PayPal account balance. 

While PayPal didn't publish the recently signed term sheet with eBay, part of that deal may have dealt with PayPal's decision to withdraw Seller Protection for transactions when buyers are not signed in with PayPal. 

It appears the new change to PayPal Seller Protection is a win for PayPal, neutral for eBay, and a "lose" for sellers. 

Things will probably look different once eBay is a payments intermediary, which is expected to fully happen by 2021, since it will be the merchant of record on all transactions including those where the buyer pays with PayPal.

We'd like to hear from readers about how big a problem they think PayPal's change to Seller Protection may be.

- How frequently does eBay seller protection prove adequate?
- How often do you have to rely on PayPal seller protection? (So will this change be a big loss?)

The change to the Seller Protection Policy is part of PayPal's updated User Agreement that takes effect in April, you can read more in this EcommerceBytes Newsflash article.

Update 3/19/18: Another way of looking at this. You can pay with PayPal and fund with a variety of methods (for example, credit card, debit card, PayPal balance). Or, eBay lets you pay with "credit or debit card" (without the PayPal branding) - this is so people who don't have a PayPal account can still pay. 

However, PayPal is on the backend processing those payments on behalf of eBay

The change in PayPal's UA indicates it will provide seller protection for the first kind of payments, but not the latter.

Note that once eBay becomes a payments intermediary, eBay will handle all payment processing using a company called Adyen; if someone pays with PayPal, it's going through eBay's PayPal account (not individual sellers), and if someone pays with "credit or debit card," Adyen will be on the backend processing those payments on behalf of eBay.

Will eBay (through Adyen) extend seller protection to those "unbranded" transactions when it takes over from PayPal? eBay may not even know the answer to that question at this point - it's early days.

But in the meantime, it seems sellers are losing out beginning April 19, 2018.

Update 3/19/18: A spokesperson told EcommerceBytes on Monday:

"We are not proceeding with the amendment originally included in the Policy Update stating a payment must be made in connection with a transaction where the buyer logged into their PayPal account in order for a seller to be covered for Unauthorized Transactions under our Seller Protection program."

Update to the update: PayPal's spokesperson responded to a follow-up question about the reason for walking back the decision: "We decided to remove it because customer confusion was identified." 

We can attest to that confusion!




Comments (35) | Permalink

Readers Comments

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: eXtinctBay

Sun Mar 18 23:50:45 2018

It appears that PayPal is shedding themselves of as much responsibility they can, and then placing the burden on eBay. Can't help that think this may be a ''sour grapes'' move on their part since the eBay announcement.

This may hurt PP in the long run if there is no seller protection on any transactions, whether on eBay or another eCommerce site. And they may lose small business customers (that need a payment processor) due to not offering 100% protection on all sales.

The seller should be able to choose if they would like to accept a payment from someone who does not log into PayPal. It does seem unfair to penalize a seller for something they cannot control. And why can't PP just require all their users to log in to their own accounts to use the site?? DUH!!!!!

I rarely, thank goodness, have to use seller protection on eBay or PayPal. One time was when a zero feedback buyer claimed they did not receive a package (tracking stated delivered), and immediately filed a claim AND left a negative feedback to my account. They were easily settled with one phone call to eBay.

Would this type of claim be denied simply because the buyer did not log into their PayPal account?? It does seem that, if eBay doesn't get paid by PP, they would not pay on one of these out of their own pocket. Or at least not every time, just as now, since there is a limit to eBay Seller Protection claims.

 

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: imbloated This user has validated their user name.

Mon Mar 19 00:25:05 2018

I don't understand about the logging in to Paypal. I always have to log in to pay for something on ebay, and then I choose whether to pay with paypal money or credit card. How does one pay with paypal without logging in?

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: Silver Ice King This user has validated their user name.

Mon Mar 19 00:39:00 2018

I agree that the seller should be able to see before completing the transaction as to whether the buyer is logging into their Paypal account and have the option to decline the payment.  But I do not see Ebay adding this option on their side since that could potentially cost them revenue which they are obviously desperate for.  So it is going to come down to Paypal to allow Sellers to decline to accept payments from those buyers that are not logged into their Paypal account.  I would expect to see something along the lines of having the payment be pending if the buyer does not log into their Paypal account and the seller then have to accept or decline the payment.  This is the only way that I see this change not resulting in blatant fraud starting to run rampant on Ebay as the buyers become aware of what they can get away with.  There has already been documented cases where the buyers are claiming an unauthorized charge on their cards from Ebay sellers so the CC company refunds their money and then they also file an Ebay claim and get their money back that way.  This results in the buyer doubling their money on the item and could also result in them getting the product while doing this since Ebay still does not cover Sellers against the buyer returning rocks instead of the item that was purchased.  This type of situation was brought up on the PS Boards while discussing the seller possibly changing to accepting free returns to maintain their TRS+ status.

I am sure this is a response to Ebay shifting some of their accounts over to intermediary payments in the coming year, but without this protection or the ability to see that we are not covered and reject the payment, the scammers are going to have a field day at the sellers expense.  The long term effects from this will result in losses that far exceed what Ebay and Paypal gain by going down this path.  Customers will start abandoning their services to avoid the losses and since Ebay is required to have at least 80% of their payments processed through Paypal they will also lose the revenues from these sellers abandoning their site.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: Jester This user has validated their user name.

Mon Mar 19 00:45:30 2018

I will start deleting many items I have been selling on eBay and using Amazon to do the fulfillment with until this loophole is fixed. Especially the higher priced items. I will continue to just sell those items on Amazon.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: Marie

Mon Mar 19 02:40:08 2018

I think we need to pose a question to Ebay.  Ina can you see if you can get Ebay's response to this change please.  My question would be if I get a PP payment notification that states that it is Not Eligible for seller protection can we decline the payment and cancel the order without penalty of any kind to include the risk to the FB?

We all need to watch our PP payment notifications closely and see if some start saying "Not Eligible" for seller protection.  The seller protection on PP has saved me many times over the years.  

It would be beyond unfair to get a claim filed in PP and auto lose it because of this.  

We need to know what Ebay is willing and not willing to do about this.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: Chicago48 This user has validated their user name.

Mon Mar 19 04:22:18 2018

This is too much for my brains.  Ebay changes, Paypal changes, the brain just can't handle it.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: Shane

Mon Mar 19 07:29:53 2018

I apologise for my ignorance, but don't you have to login to your PayPal account before you make a purchase? On both eBay and independent websites where PayPal is an option? Trying to wrap my head around this.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

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

Mon Mar 19 07:51:17 2018

This is a little off topic.  Why do some people on ebay get full price without question and others are constantly baraged with "give me a discount".  This is in connection with ebay sending out notices that they have items in carts and need to cut their prices.  One guy said he went up on his and they bought anyway?  I think its "who you are".  I need more sales because what I make is ridiculous.  How can one seller get 70 sales a month out of 600 listings and others get nothing????????????????I even do my own advertising?  I do all of it.  I'm a one women show.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: Steve M This user has validated their user name.

Mon Mar 19 08:44:06 2018

Wait!
As the other posters have said:  Are you not suppose to be logged into your paypal account to send payments.  It means providing your login credentials and then send the payment...

But, then I see credit/debit card processing on PayPal which does not require you to log-in to your PayPal account.  This happens when you are selling from your own website and you setup payment links to your paypal account.

So, what PayPal MUST do now is to inform the seller how the payment was made:

1--Funded directly from PayPal account.
2--Paid with Credit/Debit card.

However, it is unbelievable how these markets are now changing to harbor more and more SCAMMERS and the sellers are on the hook for it !!!


Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: pace306 This user has validated their user name.

Mon Mar 19 09:28:49 2018

"How frequently does eBay seller protection prove adequate"

Never - theres NO SUCH thing as "Seller protection".

As for eBay - its THEIR resposibility to tell (or it should be)  sellers what their exposure is when a buyer wants to purchase something.

Like the LAST issue (BBL) (and I said there would be one very soon) its YET ANOTHER case of eBay throwing sellers UNDER THE BUS.

If sellers arent going to be protected - then they should have the ability to OPT OUT of making the sale - but like with BBL people - eBay will INSIST sellers take that risk - unacceptable - unless ur the Devil aka the Devin.

eBay needs to make a statement (announcement) as to how they plan to deal with it .... chances are they wont though.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: epuise This user has validated their user name.

Mon Mar 19 11:00:40 2018

when a corp. like PayPal posts this... it is evidence that buyer fraud... 'unauthorized charge'... 'I didn't order that'... is UP...  

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: toolguy

Mon Mar 19 11:43:33 2018

@ Marie

"if someone pays with PayPal, it's going through eBay's PayPal account (not individual sellers)"

This is exactly what I was telling you the other day but you didn't seem to want to accept this fact. . .

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: DebraD This user has validated their user name.

Mon Mar 19 12:17:38 2018

You may not have to login to your Paypal account to complete a transaction on Ebay if you have linked the two accounts. Linking the accounts expedites the checkout process. I called Paypal over the weekend about this "update" and found that the service representatives are completely unaware of the change. I was told, if you ship to the confirmed address, you are covered. I think Ina did a better job of explaining which transactions are excluded, which seems to be those made with a credit card or debit card when the buyer does not have a Paypal account. When I asked the PP rep about the login requirement, the first thing he said, "How would the seller ever know whether a buyer logged in or not?" He then told me he was certain that these changes were applicable in Europe only, not here in the US. SoOOOO more confusion. Paypal employees don't even seem to understand the change. I think the idea of watching transaction notices for the seller protection is an excellent suggestion, especially for high dollar transactions.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: Marie

Mon Mar 19 12:50:37 2018

@shane, Steve M & toolguy

No you don't.  Ebay offers an option during the payment process of using a credit card as your form of payment.  If you select that option, you pay via your CC and PP is the payment processor, but you do NOT log into PP.  These are the transactions on Ebay this policy says PP will not cover under Seller Protection.  

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: mcposty This user has validated their user name.

Mon Mar 19 13:07:09 2018

Does this mean that there is no buyer protection as well?

I forsee paypal failing big time if there is no seller protection and no way for a seller to decipher what is a safe transaction or not.

In these cases, it should be paypal who is liable for all fraud, since they do not give enough information to a seller to make a decision.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: Marie

Mon Mar 19 14:45:19 2018

@mcposty

My guess would be YES because they are using CCs.  So all they need to do is a chargeback.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: Marie

Mon Mar 19 14:49:07 2018

Ina

But have you asked Ebay what their position on this is?  Since PP will be dropping the Seller Protection, will Ebay pick it up now or wait for a couple years until they are actually the payment processor on the transaction?

And if they are going to wait, then when we get a PP notification in that says it is Not Eligible for Seller Protection, will Ebay allow us, without penalty to cancel the transaction?

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

by: val2525 This user has validated their user name.

Mon Mar 19 16:41:17 2018

It affects more than "unbranded" transactions. Many small businesses use PayPal to invoice customers for items and services. When the customer receives the invoice, the customer has the option to sign into their PP account or to pay by credit/debit card directly from the PP invoice.  On the business end, the small business has no way of telling if the customer signed into a PP account or not. These types of transactions will not be covered under the policy change.  This will directly affect a service business I have, and many of my clients. It's not just limited to eBay.  I'm currently looking at switching all my billing to Square.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: iheartjacksparrow

Mon Mar 19 16:59:45 2018

There was always limited seller protection on eBay previously, and now there will be none. I am so glad I only sell on eCrater where I can accept payments through Stripe.

Perminate Link for eBay Sellers Worry over Changes to PayPal Protection   eBay Sellers Worry over Changes to PayPal Protection

This user has validated their user name. by: Marie

Mon Mar 19 17:09:12 2018

@val2525

Watch your payment notification emails.  Make sure you look at the field that tells you if it is Eligible or Not Eligible for Seller protection.  It appears on all transactions.

@Jack
This is a PP change, not Ebay.

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