Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri Aug 28 2015 07:16:34

Sellers Scramble to Cope with Pending PayPal Fee Hike

By: Ina Steiner

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Sellers are scrambling after learning that PayPal is hiking fees by as much as 32% for many merchants. Those who process less than $3,000/month are unaffected.

"Do the math," one upset reader wrote to us. "This is a 32% rate hike! I am considering increasing my handling fees to pass this cost on to my customers - but of course I will let them know that the increase in fees comes to them courtesy of PayPal."

Here's the letter PayPal sent to merchants on August 27, 2015:

"At PayPal, we work hard to ensure your payments are simple, secure and fast. We innovate and invest carefully to deliver services beyond payment processing, including fraud protection and seller protection, to help keep our merchants secure. We drive improved customer conversions and extend credit to both merchants and their customers to help businesses grow. We also aim to make it as clear as possible how these products work, how they are priced, and how much value they deliver to you.

"In that spirit, we are simplifying the prices we charge for PayPal transactions. Effective October 1, 2015, we will remove the tiered merchant rates for US domestic and international Purchase Payments*. This means your rate will increase if you are currently receiving a merchant volume discount. Your new rate will be the standard rate of 2.9% + $0.30 USD for domestic transactions and 3.9% + fixed fee** for international transactions. Please note that card-processing rates on PayPal Payments Pro and Virtual Terminal are not changing.

"We value our partnership with you, and we commit to investing in new capabilities to help you grow. At a time when the ecommerce industry is affected by unprecedented levels of fraud due to stolen cards, PayPal has expanded our seller protection to help keep you safe from fraud so that you can sell with more confidence. PayPal Working Capital delivers more than $2 million of new loans to small businesses every single day. To drive international growth of your customer base, we continue to build overseas to make it easy to get paid from millions of customers outside of the U.S. Our investment in new product features such as One TouchTM have been proven to increase consumer conversion. These few examples are just the beginning of our long-term commitment to help you grow your business.

"This email is for your information only; there's nothing you need to do. You can review the updates that will go into effect on October 1, 2015 by visiting this page after August 27th.

"Thank you for being a PayPal customer. We appreciate your business.
Regards,
PayPal"

Merchants who process over $10,000/month are currently eligible to receive fees of 2.2% plus 30 cents per transaction, but as of October, they'll be paying 2.9% plus 30 cents.

The same day sellers received bad news from PayPal, they got bad news from eBay - if they were considering turning to ProPay or Skrill (formerly Moneybookers) as an alternative to PayPal, that's no longer an option. As of September, eBay is banning those two PayPal rivals from its site.

On the eBay boards, a seller wrote, "Well PayPal is surely trying to boost revenue. Cash back reduced, percentage increase for anyone taking in 3k or more via PP per month, and now this to insure the 80% take," referring to the ban on PayPal rivals.

It's hard to imagine large retail chains such as The Home Depot willing to pay 2.9% plus 30 cents for payment processing fees - we're waiting to hear from PayPal if it's exempting any customers from the removal of volume discounts. 

More details on both announcements are in today's Newsflash.




Comments (99) | Leave Comment | Permalink

Readers Comments

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: blackmail This user has validated their user name.

Fri Aug 28 07:28:18 2015

and international rates are even higher, considering that in addition to the exchange fees, and the 6 month program, and free shipping pushed by ebay both ways. you can tell Johnny is at the lead again, there goes pp ..........
another *eBay company my gosh

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: comments This user has validated their user name.

Fri Aug 28 07:38:52 2015

Very true. JD has no more ebay to destroy and so now he is clearly hard at work on paypal. The long double talk "we're screwing you" email is clearly the work of JD.

This was clearly a timed move by paypal in seeing that skrill and propay are no longer options for payment. This pretty much forces the fee hike on us. At the same time I am sure it won't be long before ebay hikes it too. Paypal walked away from the split debt free and holding all the cards. They don't need to do this to us!

Also they claim they expanded seller protection? What changed other thing giving buyers a 180 day return policy where they don't accept first class shipping labels that expire after a mere 3 months.  

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: RKTOYS

Fri Aug 28 09:00:33 2015

Incredible.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: Randy This user has validated their user name.

Fri Aug 28 09:13:09 2015

With dwindling sales since 2013, I really don't have to worry about this. Kinda wish I did though!

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: Randy This user has validated their user name.

Fri Aug 28 09:22:16 2015

Never used Skrill and ProPay, like eBay, didn't work right half the time...not a big loss.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: Mark4 This user has validated their user name.

Fri Aug 28 09:45:52 2015

Well that is the final straw for me, closing me ebay store today...

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: ajeweler This user has validated their user name.

Fri Aug 28 09:46:25 2015

we changed to auth.net for our payments however we only have 90 days for disputes 2.9% plus .30 transaction fee so same thing except I can trust them don't have to stress chargebacks can still happen except less time and usps only online for 90 days too.

gave up on freebay and paypal year ago and do not regret it at all

****who ever is editing my posts kindly do it faster or remove approval as my posts are responses to others and do not get posted sometimes until it is far beyond the frame of a reply to be seen or e mail me if there is a issue thanks

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: Mark4 This user has validated their user name.

Fri Aug 28 09:50:30 2015

Antitrust laws are being violated by this, please contact your state's attorney general as we have done.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: Map

Fri Aug 28 10:17:18 2015

To me it is just another signal that they are selling ebay.

It's the last hoorah to grab as many dollars as they run out the door probably right after the Christmas season is over.

Why else can other payment methods, raise paypal fees on sellers, kill omniture and so on.

it's because they are leaving ebay with their pockets loaded and they will avoid jail time.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Fri Aug 28 10:31:59 2015

This smells like an antitrust violation to me.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Fri Aug 28 10:32:19 2015

Regarding disallowing other payment methods I mean.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: iheartjacksparrow

Fri Aug 28 10:43:14 2015

I thought eBay and PayPal split? And now other payment methods on eBay are banned? I guess all the people who said the split was a sham were correct.  

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: pace306 This user has validated their user name.

Fri Aug 28 11:25:10 2015

To me, it smacks of yet another eBay/Paypal scam.



You split the companies up (even though they really ARENT split), you then promise Paypal %80 of the business they previously received, then you eliminate the competition (in english - they refused to pay us more money to be allowed to be on eBay / they wouldnt let us dictate terms like we do with Paypal), then Paypal raises the rates.

The point for me is how it all payed out - another sneaky underhanded con job on eBay sellers.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: toolguy

Fri Aug 28 11:34:33 2015

I sell about $4000-$5000 a month.

I guess I'll lose another $15 bucks a month or so to higher fees.

It won't make me change the way I presently do business on eBay. . .

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: Eric Saeger This user has validated their user name.

Fri Aug 28 11:35:44 2015

It's just a tiny bump in the great scheme of things, but jeez, you know?

Let's see: $29 a month to build my domain's site with Shopify's drag-and-drop interface with basically less in credit card fees, or run around like Wile E Coyote on an ice patch trying to get my eBay stuff noticed over all the counterfeit garbage on eBay, for $49 a month.

Anyone here tried using Shopify, before I start trying to fit that stuff into my "schedule?"

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: pace306 This user has validated their user name.

Fri Aug 28 11:46:42 2015

Personally (and I never used the other 2 services), I think its way more then just removing the competition.



1) As everyone mentioned - the separate but NOT separate Paypal needs to be "fed daily", and with falling eBay marketplace sales - what ever those 2 payment platforms were processing - became "too much" and had to be dealt with. eBay simply treated them as they do their sellers ...



2) eBay couldnt control them. They are independant companies that probably more fair to users then Paypal is. eBay can only "punish you" if their payment arm is willing to take the money out of your account. Skrill and Propay have no interest in getting involved in that game - and wouldnt go along with eBays "managed marketplace" game.



3) with eBay changing its terms again (fall seller update)  on returns and on how they score you, eBay needs a bad guy. Until now - eBay was the bad cop, and Paypal was the good cop. eBay made up rules as they went along -good or bad it made no difference. They were the bad guy in all this. When you would complain to Paypal about it - their answer was "we just do the payment processing - its not us - go ask eBay".



If eBay is changing its rules (which they claim they are - but wont tell anyone yet) the roles are reversing. eBay will now be able to say "see we ARE the good guys. You spoke and we listened to you on these topics. We loosened the rules, BUT ITS PAYPAL (like their rediculous 180 day policy) thats the bad guy - GO BLAME THEM."   Since theres now only ONE game in town to process orders on eBay, sellers are SOL. eBay desperately needs a better reputation - and this is how you accomplish that, all while keeping the same rules in tact.



"We would have LOVED to let you only have 14 day returns (or what ever the topic is) but its PAYPAL (those %^&%^%^) thats stopping you - not us".  The game is so blatant - its so obvious!


This is the kind of behavior I have come to expect from eBay .... why do people STILL think that things will change around here?

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: RKTOYS

Fri Aug 28 12:33:06 2015

Nobody really expects change.  The big picture I see is that sales are faltering all over.  Hence eBay/PayPal smothering competition where they can, hoop after hoop to appease search engines, the rise of "competitors" with registration/subscription fees, etc.  In my own market, prices rocketing higher on lousier availability and non-existent advertising.  I don't want to run around prophesizing another market crash but it's looking more and more difficult to keep up with every day.

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

by: P.Dorf This user has validated their user name.

Fri Aug 28 13:16:07 2015

'Nobody really expects change', agreed RKTOYS.
They're too arrogant to backtrack to stimulate growth, Only the Donut mantra 'more wallet' will do.

They'll just price themselves out of the market.

Greed or desperation (or both)?

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: Rexford

Fri Aug 28 13:25:07 2015

Oh yes, this has the mark of John "the greedy" D. all over it.

And this bullsh**...."PayPal called the elimination of discounts a "simplification" of fees"

Do they really think that people are stupid?

Perminate Link for Sellers Scramble to Cope with Pending PayPal Fee Hike   Sellers Scramble to Cope with Pending PayPal Fee Hike

This user has validated their user name. by: Rexford

Fri Aug 28 13:32:14 2015

Oh, and Mr. Wenig, do you want to know why sellers HATE both eBay and PayPal?  Re-read Ina's story.

NO ONE TRUSTS YOU!

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