Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Sept 18 2019 20:06:20

PayPal Makes Refunds and Returns More Expensive: Take 2

By: Ina Steiner

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Sellers got bad news on Wednesday, learning that PayPal will no longer credit any fees when they issue refunds for returns or other reasons. PayPal had originally notified sellers of the change in its User Agreement back in April, but a month later said it would not change its policy "at this time."

Today, sellers learned PayPal will institute the policy change on October 11, 2019.

"I think this is a reversal of a reversal," one seller told us, "but I'm not sure if I am ahead of the curve or behind it on this PayPal policy."

The news hits as sellers are busy gearing up for the busy holiday season with little time to shop around for a different payment processor. eBay sellers, of course, have little choice in what payment processor they use - most are forced to use PayPal, some are being encouraged or forced into eBay Payments.

One seller wrote on the eBay discussion boards today upon hearing the news, "Then Ebay should refund the fees when a buyer changes their mind or the buyer gives a bad address." Another seller wrote, "Sellers in (Managed Payments) will be credited payment processing fees even if the buyer used PayPal to pay. I am in the program and verified this with the payments team" - but one seller was skeptical that would be the case.

When the policy was first announced in April, a reader said not only would returns cost more, but cancellations for any reason would cost more, as would partial refunds to buyers, including in cases of overpaying for shipping. "It is just going to cost sellers MORE MONEY," the seller wrote, one of 110 comments left on the April EcommerceBytes Blog post.

We saw several questions today about the following statement in the notification email: "This policy will not apply to duplicate transactions, voids and most disputed transactions." We've emailed PayPal asking for clarification.

Here's the text of the email PayPal sent out to users today:

Earlier this year, we notified you that we were updating our User Agreement to change our refund policy. We want to let you know that the policy change is going into effect beginning on October 11, 2019.

In line with industry practice and according to our updated policy, we will not charge a fee to process refunds, but the fees from the original transaction will not be returned. This policy will not apply to duplicate transactions, voids and most disputed transactions. You can review the PayPal User Agreement for more information on our return policies.

We only adjust our policies when we are confident the changes are fair and aligned with the value that our services provide to your business.

PayPal brings you more than just payment processing – your business has access to our platform's full suite of tools, products and support built to scale with you, such as customized invoicing to help you get paid sooner, access to business loans, world class fraud monitoring, seller protection for eligible transactions, and business services designed to simplify your day-to-day operations.

PayPal invests in bringing you buyers – with over 268 million active account holders worldwide, PayPal works hard for your business to make sure we continue to bring your buyers the shopping experiences they have grown to associate with our brand. PayPal is the most-used digital wallet** and PayPal shoppers complete their checkout 88% of the time on average, helping you close more sales.+

If you have questions about any of these changes or your account, please don't hesitate to get in touch with us.

Thank you for being a PayPal customer. We appreciate your business and look forward to continuing to help you grow and succeed in the future.

Update 9/19/19: PayPal responded to our inquiry, see "PayPal Clarifies New Refund Policy When It Comes to Voids."



Comments (54) | Leave Comment | Permalink

Readers Comments

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

This user has validated their user name. by: iheartjacksparrow

Wed Sep 18 21:11:47 2019

So glad I use Stripe in my eCrater store. A substantial number of orders I get are for two or more items, and I always refund the excess postage. Stripe always adjusts their fees whenever I do a partial refund.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

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

Wed Sep 18 21:29:33 2019

This should be a surprise to exactly no one.

PayPal *never* removed the verbiage from the UA(!)

The celebrations a few months ago were premature (as pointed out, quite frankly, repeatedly on numerous occasions). PayPal was simply extending a temporary unenforced reprieve.

Expect the same eventuality for eBay's image/watermark policy - it's simply unenforced for the time being.

Unless eBay or PayPal actually *revert* changes to the UA and/or T&C etc. those 'laws' are simply unenforced and sellers should be prepared for their eventual enforcement.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

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

Wed Sep 18 21:45:22 2019

I can guarantee you that the minute that Ebay does not get their fees back from Paypal in Mangled Payments that Ebay will no longer be refunding those fees to Sellers whose buyers used Paypal as Ebay is not going to eat the cost to help out Sellers.  Then Ebay will follow suit as they never have an original idea but if this will add money to Ebays pockets and not cost them anything, you better believe that Wenig will  have it implemented in a heartbeat.

This actually sounds quite a bit like a payback to Ebay for making the change to Adyen which is going to cost Paypal a lot of money on an annual basis.  Since Ebay is easily the platform with the most cancellations of any platform currently in use do to their constant showing the buyer better deals after the fact or allowing the buyer to cancel with no repercussions, this almost sounds like a ploy to help give a push to sellers to go to other platforms where there are not so many buyer friendly rules.  There obviously is no love lost between the companies so it Paypal can pick up a little extra revenue going forward to offset the loss of Ebay business plus cost Ebay money it sounds like the perfect pay back scenario.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: Dburn This user has validated their user name.

Wed Sep 18 21:49:29 2019

I've been thinking about a cancellation fee . Not on eBay. It would require something that eBay wouldn't have it's hands on. Even if they agreed, it would require badly implemented new coding where eBay decides the fee would go to them from the seller while they added a new category of INAD to our Service Metrics.

But it could work on another site for those buyers who like to buy to lock down an item and then ask for a cancellation when an offer for a lower price comes through. It seems that that every large company is copying each other as they implement new fees in just about everything. Consumers are used to them.

Thinking in 000s and 111s  

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: maxmad This user has validated their user name.

Wed Sep 18 22:38:04 2019

sounds like paypal is looking for money they will be loosing from ebay, payments ,this nice little cash grab will help, I'm sure there's more to come

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

This user has validated their user name. by: DeathFromAbove

Thu Sep 19 00:43:00 2019

As always, sellers pay, pay, and pay more for less, less, and less business.  Also online marketplaces are gradually nailing every buyer with sales tax.  Price increases and tax will drive away shoppers and create a recession.  This "squeeze" is going to be felt across all industry, and when recession 2.0 hits.  At least our greedy state governments will be flush with millions in cash they otherwise never would have seen.  Hopefully they can spend it all on free job training and housing stipends for when we all go bankrupt.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

This user has validated their user name. by: tanzi

Thu Sep 19 01:15:30 2019

That is why I only sell on Mercari now. Its a different way of selling, but it works, and the funds go right to your bank. I haven't sold on ebay in years since it went downhill many years ago and now this with paypal and forget about stripe, I almost got scammed as soon as i started using them, so stopped using them right away. But I get sales every week on Mercari, I have been there for awile now and its pretty much hassle free and easy to list. i'll stick with them for now.  

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: flybuy This user has validated their user name.

Thu Sep 19 01:22:26 2019

I agree Ebay will copy what others do if it means.more money for them. Wonder if this will affect the number of sellers offering 30 day returns.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: Tiffee Jasso This user has validated their user name.

Thu Sep 19 02:16:11 2019

I doubt it matters much as probably 90% of all sellers will no longer use Paypal once they are "forced" into managed payments.  

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: Slowest Learner This user has validated their user name.

Thu Sep 19 05:50:49 2019

@ unsuckEBAY

Can you please explain what the "eBay's image/watermark policy" you are referring to?  I'm out of the loop.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: cvsharkey This user has validated their user name.

Thu Sep 19 06:46:51 2019

You can set a policy of refunding minus fees.
Now, if Etsy starts doing this--it will be a bigger issue as they consistently get my shipping wrong & I do refunds on every order because of it. That would definitely be the end of selling on Etsy.  

I really am more concerned that Etsy looks into this as next year's money maker. Last year they raised fees, this year they all but mandated the seller's pick up shipping. This could be what they're looking for for next year.....(I hope they don't read this....)

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: Whatever This user has validated their user name.

Thu Sep 19 07:05:04 2019

Hummm - actually I think it's a fair policy - go ahead club me over the head. Here's the deal - how many refunds are you making on other venues besides eBay? For me the answer is zip zero nada. eBay is the only selling venue that I have to refund money to buyers. Don't you think it's odd? I had "I just don't like it" twice just this week. Paypal did their job in the first place - they processed the payment - they gave you your money almost immediately (not going to happen with ebay).  Job completed so because of some asinine eBay policy - you know the one - Show and Tell I call it - both the seller and paypal is penalized.

So what happens then? For me that buyer is immediately placed on my blocked bidder list on all 3 ID's. I don't need that type of buyer and quite frankly I never used to get them until eBay decided anyone can buy my items wear them - use them - break them - steal some of them and return 1/2 of them. I find it incredibly hard to believe that I haven't had one single return on my own venue. How can that be?  And how many sellers also add that buyer to their blocked bidder list? Surely I'm not the only one.

Paypal is simply trying to recoup their losses from eBay - once eBay is completely gone from their hair their going to be just fine. As for the sellers who remain with eBay - the ones who choose to stick it out - we will see what we see. At least we have the choice to leave the venue and when it is no longer profitable I will.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: angryllama This user has validated their user name.

Thu Sep 19 09:17:02 2019

STOP REFUNDING "FREIGHT OVERCHARGES" !    If you list your item's Anticipated Gross Shipping Weight and Dimensions accurately AND use eBay's freight calculator for the SHIPPING COST shown to your buyers... Do Not Fool Around with Shipping costs AFTER your Buyer has PAID.

Your eBay BUYER viewed you listing, buyer SAW the Commodity Price, SAW the shipping cost, LIKED the COMBINED cost of Goods PLUS shipping, and then YOUR BUYER CHOSE to pay it.  
Done and Dusted.
Nowhere, No Time and No How is any eBay seller encumbered to DROP the shipping cost paid by your buyer.  
If you cannot afford to BUY a CLUE, at least RENT one.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: macsbaby This user has validated their user name.

Thu Sep 19 09:48:43 2019

Well.....I will send larger refunds back by check then.....I would rather give my cents to the USPS than these guys who just trying to figure out how they can chisel more of our earned funds. Or I can give it by direct family/friends......then they are going to eliminate that, because that is going to get abused all to heck.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

This user has validated their user name. by: NoMoreEbay

Thu Sep 19 09:49:11 2019

The money grabs and fee hikes are epidemic across eCommerce and delivery services. If you can tolerate the platform (many no longer can,) The question you have to ask yourself is can you still make a profit. If the answer is no, then online selling is dead for you. It really is that simple.

Thanks to greed, that is or will be a reality for millions of sellers in the near future, including large ones. The platforms that rely on sellers for their survival are killing off those very sellers one fee hike at a time. Human nature exactly as it has always been for thousands of years.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: epuise This user has validated their user name.

Thu Sep 19 10:20:40 2019

Desperate Sellers are losing money daily trying to get any kind of sales, when, it's not the Site, or, your stuff... IT"S THE ECONOMY.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

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

Thu Sep 19 10:31:14 2019

@Tiffee Jasso

I doubt it matters much as probably 90% of all sellers will no longer use Paypal once they are "forced" into managed payments.  

But Ebay is still going to allow the buyers to use Paypal and it will be using the Ebay Paypal Account.  So when Ebay starts getting stuck with these fees on no sales, you can bet your bottom dollar that they will pass those fees on to the Sellers as there is no way Ebay is going to eat it nor are they going to force the buyers to eat the cost nor stop cancelling items as the buyers can do no wrong on Ebay.  So yes it will matter because in the end the Sellers will still wind up paying the extra cost even when they are in Mangled Payments even if they no longer have or use a paypal account.  Ebay will just deduct it from what the Seller  is due to have sent to their bank or add it to their monthly invoice.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: Mark4 This user has validated their user name.

Thu Sep 19 10:37:29 2019

Spoke with the FTC this morning, had the agent read this article. The FTC agent said this is blatant theft and urged us to file a complaint with them. If you are reading this, please do the same. As far as our 3 websites, paypal is being thrown off all 3 as a payment processor. As far as ebay goes, the little inventory we have there just went to a 0 return policy.  

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

This user has validated their user name. by: Lightning

Thu Sep 19 10:39:03 2019

Don't listen to the Llama.  He's just angry.  Do the right thing.  If someone overpaid shipping, it's ok to refund it, and you should if you can.

Sometimes they overpay because they didn't know how to combine items in their cart.  Or didn't wait for an invoice, if that is how you do it.  Or paid for international shipping on multiple items because eBay can't figure how to adjust it for each specific country, knowing (hoping) you will fix it on your end.  Sometimes you have to put an estimated shipping charge due to size or packaging complications, and state that you will refund any unused shipping paid.  That's another situation that can cause a shipping refund.

Sure, the buyer paid (overpaid) for it while they were high on endorphins during the purchase.  Then later, they figure out that they overpaid.  Where do you think they will get even?  Your feedback, maybe.  Just return it if you can, if it's significant, and take some comfort in doing the right thing, following the golden rule and your conscience.  

And if you charged $15 for shipping and it cost you $5, that is going to irk the buyer, too.  They are not stupid.  Feedback bomb coming.  Try to set it accurately to avoid that.

The Llama is right that if they liked the total with shipping, agreed to pay it, sent it, you should leave it alone.   If there is a large disparity between charged and actual shipping, you should just fix it so it isn't so glaring next time, keep it commensurate with actual costs.  But in situations where the over-payment is unwarranted, send some back.  Otherwise it's like keeping money you saw drop from someone's pocket, instead of letting them know they dropped it.

Perminate Link for PayPal Makes Refunds and Returns More Expensive: Take 2   PayPal Makes Refunds and Returns More Expensive: Take 2

by: cellular-seller This user has validated their user name.

Thu Sep 19 11:06:14 2019

Apparently Paypal thinks that because their services have been used they are entitled to these fees.  E-Commerce sellers are burdened with returns as are all companies involved with sales with a normal return / warranty / refund policy.  We all eat the costs associated with having a return policy, and therefore so should Paypal.  No self-respecting business is entitled to charge a transaction just because their services were used, not every transaction will be completed and It is just a cost of doing business.
Paypal needs to rescind this arbitrary and capricious policy change.

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