Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon July 12 2021 16:39:39

eBay Cancelled Orders Cost Sellers in Several Ways

By: Ina Steiner

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When a buyer cancels an order, sellers are not refunded the entire eBay fee. And according to an EcommerceBytes reader, that's not the only cost.

When a buyer places an order, sellers enrolled in eBay managed payments pay a Final Value Fee (commission plus payment-processing fees) to eBay along with a 30-cent per-transaction fee.

When an order is cancelled, eBay returns the buyer's payment and credits the seller for fees, but keeps the 30-cent fee.

In an email to EcommerceBytes today, a seller explains another, hidden cost of cancellations:

"I've recently had a run on eBay of buying, paying and then a request to cancel the order instantly. At least I hadn't shipped it yet. 

"I just realized when you do this eBay then takes the cancel / refund money out of your "Available Funds" and charges you $.30 for canceling the order. No big deal on the $.30 (eBay needs it worse than me) but the big deal for me is the funds from the order are still processing and not turned to "Available" for a few days."

So, before the seller received the payment from the buyer, eBay took the money out of his Available Funds, as he explains:

"I'm in the eBay Managed Payments system and the canceled sale refund instantly takes the money out of my "Available Funds" and reduces that value. The proceeds from the sale stays in the "Processing" a day or two and then it is posted to the "Available Funds" after the refund was given several days before. 

"In short, the buyer gets my money before I get his."

When a seller gets a lot of orders that are then cancelled, or if it happens on a pricy item, it can put a strain on their cash flow.

Cancelled orders can also cost the seller time in dealing first with the order, then with the cancellation.

Let us know if you have a pet peeve related to cancelled orders and if the frequency with which your buyers cancel orders has changed.



Comments (34) | Leave Comment | Permalink

Readers Comments

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by: ShortSeller This user has validated their user name.

Mon Jul 12 17:56:40 2021

Just another not so subtle example of how managed payemnts screws the seller.

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This user has validated their user name. by: RKTOYS

Mon Jul 12 17:59:37 2021

They ought to make bidders eat that transaction fee on cancellations within three days.  But we all know they won't, not as long as they can keep abusing sellers instead.

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by: pace306 This user has validated their user name.

Mon Jul 12 18:32:09 2021

See when you deal with the MAFIA, they ALWAYS get "theirs" first, then maybe you get yours .... thats how "this business of ours, works".

eBay SHOULDNT even keep the 30 cent fee - unless YOU as the seller cancels, but when a buyer does it - the eBay cheerleaders come here en mass to complain that "poor old eBay, those gosh darn BILLIONAIRES with their free everythings and BILLIONS in profit will loose money and "its not THEIR fault so they NEED your 30 cents!" Its all lies of course (Florence Nightingale Syndrome reigns supreme) but this isnt the story about the Great eBay robbery - we've gone down that road and the the 30 cent VIG is here to stay.

Yes, eBay will take its money from you IMMEDIATELY - one of the great unspoken perks of MP - eBay no longer either needs to wait 30 days (everything now is COD and the cheerleaders all applaud like trained seals) for ITS money, nor does it have to "get it" from Paypal.

Its 1) buyers, 2) eBay, 3) Sellers ... if you are lucky

OF COURSE, if a buyer cancels a sale then THEY should have to pay the 30 cent "fine", but eBay being the disgusting robber barons with no moral people would NEVER let truth and honesty get in the way of buying alcohol for Walkers West, or paying for Griffs Free gym or day care services.

When you associate with garbage you tend to get abit dirty at times.

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This user has validated their user name. by: The End

Mon Jul 12 20:24:12 2021

A Class Action law suit is in order here.
Rake it in BIG time.....

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This user has validated their user name. by: Ric

Mon Jul 12 21:33:53 2021

Who is to say that eBay does not create shadow accounts, make 'purchases' and then cancels them just to suck in the fee revenue?  

Picture a handful of eBay staffers randomly buying and immediately cancelling purchases for 8 hours every day.  That $.30 per transaction really adds up quickly for eBay.

A trustworthy company would eliminate any and all circumstances where they might be complicit in fraud.  eBay should refund 100% of fees taken for cancelled transactions in order to avoid any semblance of impropriety. eBaysimply does not care about the lack of ethics so clearly evident in their Mangled Payments policies.

Sellers, like it or not, eBay is your business partner. When you can not 100% trust your business partner, the only reasonable thing to do is to protect yourself and end that partnership.

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by: Vigilant Eye On eBay This user has validated their user name.

Mon Jul 12 21:45:58 2021

The 30-cent charge is the interchange fee (aka ''swipe fee'') that is imposed for credit card verification and is not refunded by the acquiring bank should an order be canceled or refunded.

Although I may be mistaken, eBay appears to be the only venue that allows buyer order cancellations.

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by: I Must be Crazy This user has validated their user name.

Mon Jul 12 22:13:02 2021

These one minute cancellations are the only thing that has increased for eBay sellers! I don't like the 30 cent non refundable fee although I think it may be standard with many processors. If I am not mistaken, Paypal does the same. I don't really take issue with the 30 cents.

I do take issue with my cleared funds being reduced for the refund while I wait for the funds attached to the cancelled order to clear. This very scenario is why I wait a day or two before accepting the cancellation and issuing the subsequent refund.

There is a caveat however. Being petty and vindictive, eBay could reduce your visibility until that cancellation request is handled. So this approach can bite you in the end. I choose not to care. That approach may not work for everyone though.

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by: angryllama This user has validated their user name.

Tue Jul 13 06:49:36 2021

Just like EBAY PROMISED when they announced that Managed Payments would cost sellers LESS $$  ----  Then proceeded to OPT IN seller after seller with MANY of the DETAILS hidden behind a veil of secrecy.

They promised Sun Beams,  Lollipops,  and My-Little-Pony-Unicorns ...

I have yet to see MY eBay supplied Unicorn...  anyone else?

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by: Snapped This user has validated their user name.

Tue Jul 13 08:55:23 2021

This isn’t just about the skewed mechanics that drives this particular raking. There’s something more insidious to consider. What is motivating all these fickle buyers?

Not every - likely not many actually, of the instant cancels are caused by simple ‘mistake’. After all, all actions to complete a bid or purchase requires a ‘confirming act’ by the buyer as well, before any purchase is ‘registered’.

But…eBay will, after that action, entice a buyer to ‘reconsider’ by flashing a bunch of OTHER ‘deals’ they ‘could have bought’, now that they’ve shown they can make a commitment. Cheaper maybe. And (imagine that), it’s still not too late!!!

@ thirty cents apiece.

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This user has validated their user name. by: Carl

Tue Jul 13 12:06:36 2021

actually, this is one of the ways manages payments is better than PayPal.
Remember, PayPal kept ALL the fees from cancelled orders, this could be very lucrative for PayPal depending on item value.
At least eBay return all that except the 30p fee
I can live with that.

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This user has validated their user name. by: Rexford

Tue Jul 13 14:04:56 2021

"At least eBay return all that except the 30p fee"

In other words if you strike someone in the face a little hard that is better than striking them on the face very hard.  I've always hated this kind of logic.

The buyer should eat the fee. The buyer is cancelling.  Of course we know that eBay will never see it that way.   eBay sees sellers' pockets as a never ending cash cow.

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This user has validated their user name. by: Lightning

Tue Jul 13 14:58:02 2021

This retention of the 30 cent fee has been around for decades, long before e-commerce or the even the internet itself.  It's not going to change.  The cc companies are the source of it, and everything flows downhill from there.

If you don't like the 30 cent penalty, you're sure to enjoy it when they change it to 49 cents, like the new PayPal rates.  

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by: pace306 This user has validated their user name.

Tue Jul 13 15:30:04 2021

"This retention of the 30 cent fee has been around for decades, long before e-commerce or the even the internet itself. It's not going to change. The cc companies are the source of it, and everything flows downhill from there."

Its really simple - if a SELLER cancels then they loose the 30 cents - its their fault.

if the BUYER cancels - then eBay should eat the 30 cents - as its NOT the sellers fault.

That something has "been around for ages" means nothing - right is right, wrong is wrong.

As well - eBay no longer waits 30 days to get paid - thats worth %3 that they SHOULD give back to sellers. Wasnt that long ago when sellers paid fees at the end of the month - aka ANOTHER unspoken cash grab.

eBay could SIMPLY put the verbiage in the TOS and require buyers to have a CC on hand/on record when signing up. Just make the deduction as needed.

eBay seems to be able to quote "chapter and verse" on every other law / rule (legal or not) about what sellers are responsible for - somehow when its a buyer issue ... they are asleep at the wheel.

Its always about fighting with your sellers with eBAy - its 24/7 finding something to get them on - ever see an update that cracks down on BUYERS? ..... funny how that works.

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This user has validated their user name. by: Carl

Tue Jul 13 15:44:41 2021

Like @Lightning just said: it isn't anything to do with eBay. The card companies do not return it.
eBay return absolutely 100% of the part they can control.

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This user has validated their user name. by: Lightning

Tue Jul 13 16:54:34 2021

@pace
As part of the terms of accepting credit cards, there is a lot of language in those agreements that is buyer-friendly, and merchant UN-friendly.  Like the fact that you can't add the credit card costs onto the price, or you are in violation of the agreement.  If you don't present the price to be the same cash or charge, the credit card company can revoke the use of its card for your future business.  They don't want you imposing ''user fees'' on buyers, or setting a minimum price requirement to use a credit card.  They want it to be seamless, as if it was cash.  

Of course they want the MERCHANT to pay for that effect, but argue that you do more business by accepting the card than not having it as a payment method.  And that is likely true.  People are apt to spend more and more often when they don't have to pull cash from their wallet.

So in this same vein, if eBay starts shooting a penalty over to the buyer, the cc companies are going to get an earful from their customers.  And the cc companies will hold that over ebay's head to shut it down.  So we're back where we are now.

Something eBay could do would to let people use their MP money to purchase things.  If eBay wanted to charge the 30 cents to the buyer in those transactions, they can.  There is no credit card company involved.  

But in these futuristic MP transactions, to have money there you must have sold something, so you are also a seller (in general).  But now you are buying something with the funds, and change your mind.  You get hit with the 30 cents from either direction.  There's no escape!!

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This user has validated their user name. by: Rexford

Tue Jul 13 17:48:33 2021

"So in this same vein, if eBay starts shooting a penalty over to the buyer, the cc companies are going to get an earful from their customers."

And if credit card companies don't budge perhaps the buyers will learn that there is a penalty for ordering and then immediately cancelling and that in itself would curtail this type of impulsive and irresponsible buying.

No one is held accountable for anything these days.

And that "it's been this way for decades" mentality has launched a lot of cutting edge businesses who are shaking up the status quo.    Example: Warby Parker, which in my mind is Luxottica's worst nightmare.  In their market, Warby Parker is upending "it's always been that way".   Excellent service, style, quality and affordability.

No one is held accountable for anything these days.

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

Tue Jul 13 21:16:53 2021

@Lightning

You are correct that the CC companies do not refund that transaction fee to the processors or Sellers, but they also are NOT paying $0.30 per transaction.  It has been awhile since I left the CC Business but not a heck of a lot has really changed all that much and the cost to Ebay, if anything, for the transaction fee is something in the range of $0.05 per transaction.  So they are still pocketing the rest of the money, something once again to add to their bottom line.

I understand that Most of the time Sellers sign an agreement to process the credit cards, but they are also usually allowed to shop around and find the lowest rates, where Ebay has just plain FORCED anybody who sells on their site to use them as the processing company and then are doing absolutely nothing that they have a fiduciary responsibility to do on the behalf of the Sellers.  All Ebay keeps looking at is their bottom line that continues to not grow anywhere near as fast as the other online platforms are.  They just cannot get it through their heads that if the sellers are happy and want to sell on their platform they will grow so much faster than they currently are.  But starting with Donohoe and continuing to the present useless CEO, Ebay continues to do nothing but pad their bottom line at the expense of those Sellers who remain on their platform.  Wenig even admitted that his plan was to reduce the number of sellers and the amount of sales while still trying to show growth in their revenues by constantly reaching deeper and deeper into the Sellers pockets.  This is why Ebay continues to struggle to show growth and will continue to struggle until such time as they are bought out and upper management replaced with people who understand the ecommerce marketplace as well as retail sales in general.  

The fact that they refuse to put money into the repair of their site speaks volumes as to how worthless it has become.  When they sold Stub Hub a good chunk of that money was SUPPOSED to be put into improving their site and its "glitches" so Sellers would start selling more on the site as well as Sellers coming back to Ebay.  But none of this happened and I am sure it is because they finally woke up and realized that the product they now have would cost more than its worth to fix and they are not willing to start over as they did with Sellers Hub because that would impact their yearly bonuses.  Mangled Payments depends on the Sellers having Sellers Hub as that is the only Ebay program it will work with, which also then gives Ebay more ability to manipulate Sellers sales as well as their money.  Ebay has repeatedly shown this is what they wanted all along as they continue to not make timely payments to the Sellers as they are supposed to for all kinds of various reason/excuses and refuse to get the Sellers easily utilized reports to be able to track what Ebay should be paying versus what they actually send to the sellers.  They have also shown time and time again that the only Sellers who will get overcharged monies refunded to them are those that take the time to prove that Ebay made the mistakes rather than correcting all of the "glitches" and refunding all of the overcharged monies, which is still nothing more than theft of money owed to the Sellers.  

I could go on and on about the lack of ethics and morals at this company, but why bother since they have no intentions of ever changing them or even following their own rules and guidelines.  They are starting to feel the pressure of all of these changes, especially in the trading card categories as more and more Card Sellers are starting to move to other sites where traffic may not be as good as it is on Ebay, but that is slowly but surely changing.  Sellers are tired of getting their monies and cards stolen by the buyers who are enabled by Ebay with no consequences for doing so.  Ebay is so desperate for buyers, that they changed their policy on cancelling unpaid items in a way that Sellers think is helping them, when in fact it will just generate more money for Ebay as they continue to keep the $0.30 transaction fee on more and more transactions since they will no longer be automatically blocked when they get 2 unpaid item strikes.   Nothing ever changes on Ebay unless it is going to put more money in Ebays pockets while taking more and more from Sellers.  They just do not understand that a Happy Seller will generate more and more sales rather than constantly reducing them while trying to maintain revenue growth.

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by: Shanna This user has validated their user name.

Wed Jul 14 00:16:33 2021

Silver Ice King makes a great point. Credit card processors charge different amounts based on total volume. The larger the merchant, the less they pay. While Paypal is raising their rates for small sellers, large PP merchants, like Walmart and Home Depot are not getting a rate increase from the 0.9% transaction rate they pay, nor are they losing the vig on returns and cancellations, that is only for the unwashed masses.

Ebay is processing million in transaction every day, their processing fees are much less than the 2.9% + $0.30 they charge most sellers (I'm sure their diamond big box partners pay much less). Ebay pushes returns and cancellations on buyers. On your purchase history page, the highlighted button is not "Leave Feedback" or "View Order", its "Return this Item". Why is that? Well eBay makes more money on the shipping label than the FVF, so getting the seller to pay for shipping to and from the buyer means more money for eBay.

Same for cancellations, they send and email to the buyer with a list of the same items for less, so they still get a sale FVF, and add in the cancel fee they make more money doing it this way.

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This user has validated their user name. by: Lightning

Wed Jul 14 03:13:54 2021

I have lost more money in a single post here (if paid for my time) than I have lost in all the 30 cent fees in my 23 years with eBay.  And I am pretty sure that is true for each one posting.  So let's put this in the perspective of all the other things eBay does wrong - infinitesimal.

If eBay charged me a 30 cent fee EVERY DAY, it would at most be an annoyance.  The day I start worrying about those fees, which are about 1 time per $50k in sales, will be the day I get off this train.  I'm sure about a hundred other things will cause it first.

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by: pace306 This user has validated their user name.

Wed Jul 14 09:17:33 2021

@Lightning

I cant argue with you about how the process works - and I think we may agree on how it SHOULD work ... BUT

1) if the sale cancellation was done by eBay for no reason/cause then any associated charges should be born by eBay since its "their fault" and not the sellers

2) neither the agreements between eBay and Adyen nor the ones between eBay and Paypal have direct causation on sellers - they didnt sign the agreements nor are they legally bound by them. Banks, Visa, Mastercard etc can have any agreement terms they wish with the people they are doing merchant services for - but they are not binding to 3rd parties. eBay sellers are FORCED (coerced since eBay is the San Jose Mafia) to enter into "shrink wrap licenses" when joining the platform. They have no knowledge of the specifics, no part in its creation (cc processing agreements) and therefore arent bound by them. Should sellers for what ever reason wish to explain why they are adding a "eBay convenience rip off fee" to their sales - they are so entitled. How eBay itself would deal with it is another matter entirely.

Im not gearing up to fight the 30 cent battle. It happens so rarely (if ever) to me that its not a fight (or even an argument) that (as you said) is worth the time to take on.

Its just ANOTHER case where eBay steals from sellers - simply because "they can".

I just wonder that if as eBay says (in its own TOS) that a sale is an agreement between buyer and seller exclusively - if they have the right to allow cancellations with out prior seller approval AND if they ARE involved (actively in its cancellation) that 1) they are responsible to bear all costs 2) whether or not it even legal for them to void "a contract" aka an "agreement to buy" and 3) if they are not the venue they claim to be (in court)(which they arent of course) if they are responsible for any OTHER legal actions (aka they are jettisoning the Safe Harbor provision by injecting themselves into the process) ....

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