Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Apr 30 2020 11:39:07

COVID Makes PayPal Refund Policy More Painful

By: Ina Steiner

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An eBay seller implored PayPal to suspend its recent policy that increases the cost of refunds and returns for sellers. The seller asserted that the coronavirus pandemic is resulting in more returns, which is putting a burden on sellers at a time they can least afford it.

"Buyers don't read listings (not the seller's fault), they buy things impulsively (not the seller's fault), and we, sellers, should not have to pay a penalty for buyer's incompetence, especially during this pandemic (or anytime if cancelled within 24 hours)," the seller wrote in an email to EcommerceBytes.

The policy the seller references: as of September, PayPal no longer credits any fees when they issue refunds for returns or other reasons.

The reader urged sellers to write to PayPal and ask them to adjust its policy so it refunds fees when sales are cancelled within 24 hours. "That's really not too much to ask," the seller wrote.

Let us know if and how the new policy is impacting your bottom line, and if you've seen a change in return rates during the COVID-19 pandemic.



Comments (20) | Leave Comment | Permalink

Readers Comments

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: pace306 This user has validated their user name.

Thu Apr 30 12:22:20 2020

To get the proper perspective on Paypal, you only need look at who "its parent" was - ie eBay, ie "the culture of corruption".

Now a certain young lady here will say "you are always so negative! dont you realize that Paypal has to pay those costs because they did the actual transaction - mistake or not - so why should they have to eat the costs!?"

Oh good grief!

True they do - but if you are going to be an independent "Marketplace Facilitator of Funds" - key word being INDEPENDENT then be so.

If the fault(s) lay with eBay - then let them eat the costs.

If the faults(2) lay with the seller (its an off eBay transaction) - then let the seller eat the costs.

The issue(s) are that the 2 companies are still VERY much intertwined and as much as they crow about being separate - they arent. The have operating agreements shoveling each other business and customers. As USUAL with the 2 parasites of the internet (eBay and Paypal) its all about THEIR good/benefit and NOT YOURS.

Paypal knows about all of what they OP complained about - they just dont care. Those costs are now "off THEIR books" and thats really all that counts here (isnt it?).

If you lie down with dogs, you get up with fleas

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: hua This user has validated their user name.

Thu Apr 30 14:14:04 2020

what a joke-"Powered by sells". eBay is the worst for the sellers.  

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: Shanna This user has validated their user name.

Thu Apr 30 17:13:13 2020

As someone who worked in banking for 22 years, let me tell you that very large merchant credit card accounts do not pay penalty fee on returns, just the per transaction costs, which can be for a fraction of one cent, as the cost of a few electrons moving back and forth do not cost much at the end of the day. Paypal is one of the largest merchant accounts there is, they do not pay any penalty to Visa, MC, AMEX or Discover on returns, thus their claims of passing along costs is a lie. How many Paypal transactions are just Paypal balances moving back and forth? What is their cost of business there?

As most eBay transactions are going directly to the seller, they think they can act like a merchant service provider and charge these small entities more, like real credit card providers do. But they are not a credit card merchant service provider, and they do not have to follow US banking laws as just a money transmitter. When eBay becomes the merchant of record, will Paypal and eBay still play the game of keep the vig? Paypal does not charge this fee to their larger partners, like Walmart and Home Depot. I'm sure eBay will be a larger customer than those 2 combined. To try to pass this cost, which is only a money grab, would be illegal if they were a bank. Ebay could have stepped up when this was first announced and nipped it in the bud, using their leverage to tell Paypal no on eBay sales. But they didn't, as I am sure they will try to institute this same inane policy as soon as they have trapped all sellers in Managed Payments.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: Fistfulofdollars This user has validated their user name.

Fri May 1 14:09:23 2020

Other than the $0.30 transaction fee that PayPal keeps on a refunded transaction, I don't know what other transaction fees you're talking about. I just logged into PayPal and checked five recent refunds and in every one of them it listed a fee reversal (minus the $0.30).  

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

This user has validated their user name. by: iheartjacksparrow

Sun May 3 10:34:52 2020

Are the people complaining running legitimate businesses? Because all PayPal fees can be deducted on their tax returns.  

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

This user has validated their user name. by: Ina

Sun May 3 11:49:52 2020

The normal policy is no longer just the 30 cents: "If you refund a payment for goods or services, there are no fees to make the refund, but the fees you originally paid as the seller are not returned to you. The amount of the refunded payment will be deducted from your PayPal account."

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: thebobman This user has validated their user name.

Mon May 4 00:21:35 2020

>I just logged into PayPal and checked five recent refunds and in every one of them it listed a fee reversal

Paypal waived the fee for the month of April. Beginning in May, they started withholding it again.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: thebobman This user has validated their user name.

Mon May 4 00:22:49 2020

Email on March 21st from paypal.
>>>><<<<<
At PayPal we are here to support you and we know that the spread of COVID-19 and its impact on the global economy has serious implications for your business. We have seen that you have been particularly impacted by recent customer behavior and so we would like to offer a temporary refund policy on your account. This means that from today until April 30th, PayPal will not withhold any of the transaction fees when we process a refund on your behalf.

We understand this is a difficult time for businesses, and we want to do our part to help support you. The updated policy will be automatically applied to your account. If you have questions about any of these changes or your account, please don't hesitate to get in touch with us.

Your team at PayPal

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

This user has validated their user name. by: Lightning

Mon May 4 00:22:51 2020

@Fistfulofdollars
As Ina posted, the policy has changed.  Used to be that you would refund the total and get reimbursed the original PP fees that you paid earlier, less the 30 cents.  Now the buyer gets the full amount back, as before, but YOU get no credit for the original fee.  You're stuck with that.  

Paypal doesn't charge you to do the refund, but that will be the second shoe to fall, down the road sometime, most likely.  They'll figure they moved money twice, why not get paid twice?

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: ox-mix This user has validated their user name.

Mon May 4 00:28:23 2020

@lightning

"Paypal doesn't charge you to do the refund, but that will be the second shoe to fall, down the road sometime, most likely.  They'll figure they moved money twice, why not get paid twice?"
Why give PayPal any ideas?

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

This user has validated their user name. by: Lightning

Mon May 4 00:37:45 2020

@thebobman
I suspect that not everyone got such an email from Paypal.  I know I didn't.  I had small partial refunds on 4/22 and 4/29, no reimbursement of transaction fees.

Maybe there are targeted areas for that, impact zones, etc.  Especially going by this part of that email: ''We have seen that you have been particularly impacted by recent customer behavior''

Adding the word ''particularly'' signals to me that it wasn't universal.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: purpleiris This user has validated their user name.

Mon May 4 00:43:51 2020

I wonder how often returns would happen if buyers were held responsible for all fees -- not necessarily by sellers, but by law? Fortunately, I don't have an issue with them, but I would have a problem paying for other people's mistakes.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: donald This user has validated their user name.

Mon May 4 01:06:29 2020


Thank you Shanna for confirming what I too always knew.  

Some sellers here still think that paypal gets to pay for the fee on a refund when in fact they don not.  Those sellers or posters were probably paypal representatives or dumb fans of paypal.



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This user has validated their user name. by: Marie

Mon May 4 02:31:46 2020

@thebobman

You are very special.  They certainly did not send me that email and I'm not aware of any other seller getting it besides you.  Don't get me wrong, I'm happy for you, just a bit jealous.  But good for you.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: hawk This user has validated their user name.

Mon May 4 05:02:18 2020

all you hear from any of these places on line is how they are here for small business during this pandemic. yeah-----no refunds on cancellations , raising  fees, take away , take away , and more take away. what a pile if BS given to small business. wake up  ,  the rich has never cared about small business and never will.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: cvsharkey This user has validated their user name.

Mon May 4 07:14:48 2020

PayPal started out a ''pure'' company. Then they went public, and then it was purchased by eBay. Then eBay spun it off, but the damage was already done.

Companies who start out with a strong mission statement to do good always lose it when they go public because those who got them to the point of being able to go public are no longer their customers--their shareholders become their customers.

Look at Etsy for a prime example of this.

It used to be a company sold a product. And built itself up to the point of being able to go public. They had employees and sometimes shared (a little) in their growth with their employees.

But then online marketplaces came about. Now there were employees, but there were also ''sellers'' or ''shop owners'' and THEY were the ones who added value to the company. But the companies don't have any loyalty or honor towards these, what you could call ''internal shareholders.''

And when the company goes public, those ''internal shareholders'' inevitably get screwed.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: wellspring This user has validated their user name.

Mon May 4 08:11:25 2020

I didn’t get any memo from PayPal regarding waiving the fees in April for refunds. I wonder if personal accounts got it but business accounts did not. Regardless, why only one month and why not to everyone? Covid is far from over. Only 30 days and only to some sellers. Woohoo. Thanks for nothing PayPal.
And, since ebay continues to dangle to buyers lowers priced “similar or same” items to buyers AFTER they’ve checked out, resulting in canceled sales, ebay contributes to the problem. Perhaps, ebay gets a kickback from PayPal for cancelled sales? A seller never knows....

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: thebobman This user has validated their user name.

Mon May 4 09:26:46 2020

Both my accounts got the email. I have a small brick and mortar, and that got the email, and got credited on a couple refunded. And my account got it, which I think is also a business account, that I do something like $80k a year in sales on it. Since both accounts got it, I didn't think it wasn't widespread.

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

This user has validated their user name. by: LasVagueness

Mon May 4 13:16:51 2020

I am confused. After wrangling with PayPal for a full 3 hours in January I was presented with a solution: downgrade my business account to a personal account and the withheld return fees would no longer apply. Obviously this solution would not work for large scale sellers but it worked for me (I think!) as I keep my sales below the 200 annual threshold that triggers taxable 1099s.  

Perminate Link for COVID Makes PayPal Refund Policy More Painful   COVID Makes PayPal Refund Policy More Painful

by: Fistfulofdollars This user has validated their user name.

Wed May 6 10:47:21 2020

@LasVagueness

I don't have a business account either. I just processed two refunds last night through eBay and when I checked my PayPal account they reversed the fees for both of them except the standard $0.30 each. Maybe the fee retention on PayPal's part is targeted at business accounts. I don't know (and don't want to poke the dog with a stick).

I was wondering if PayPal made this move in light of eBay trying to push them out with the rollout of ''Managed Payments'' since eBay (like Shopify) will harvest the fees from people using payment methods other than PayPal. Sounds like a vindictive move on the part of PayPal if this is the case. And guess who gets screwed... again.

I've been with PayPal since their inception - back when they paid you $5.00 to join.  



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