Paypal collects fees on refunds

by seobro
27 replies
Paypal is not my pal anymore. OK, so Paypal collects fees on refunds now. This is a major pain. I like to offer a 30 day money-back guarantee. Well, what are your thoughts on this new one?

https://www.theverge.com/2019/9/20/2...rs-controversy
#collects #fees #paypal #refunds
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  • Profile picture of the author DWolfe
    Interesting article, I use paypal for ebay but do not see this update from them.
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  • Profile picture of the author vishwa
    This is a normal practice done by almost every online payment processors. PayPal also follow the same.
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  • Profile picture of the author Medon
    Yes, they are justified. Look at it from this perspective, they pay the employee who facilitates the transaction( I know you will say it is automated), So if the employee must get their commission when facilitating the refund where do we expect this money to come from?
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  • Profile picture of the author Jennifer Wright
    it's true i read about it
    PayPal will begin pocketing the initial 2.9 percent commission fee sellers forfeit during a transaction even when the seller is refunding a customer in full.
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    • Profile picture of the author agmccall
      Originally Posted by Jennifer Wright View Post

      it's true i read about it
      PayPal will begin pocketing the initial 2.9 percent commission fee sellers forfeit during a transaction even when the seller is refunding a customer in full.
      They do not pocket the 2.9% that was paid to the merchant account, they do not get it back so why should you.

      Everybody that does not like this should get their own merchant account. Oh yeah, I forgot to mention it is $30.00 per month for a general merchant account plus the percent per sale and that is for Visa and Master Card. If you want to accept American Express and Discover there is another fee plus percentage. And if a customer refunds you do not get that percent per sale back, that is a processing fee. If a customer refunds it does not mean the "process " did not happen.

      al
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      • Profile picture of the author ravijayagopal
        PayPal is the merchant here. They're not built on top of, or depending on another third-party merchant service or gateway like Authorize.net, for eg.

        So they're not like a ClickBank or Patreon in that sense. So PayPal actually does pocket the 2.9% (of course they have their backend expenses and such, but that's besides the point).

        PayPal used to give that 2.9% back - which they charged and pocketed previously.

        And now they won't.

        Originally Posted by agmccall View Post

        They do not pocket the 2.9% that was paid to the merchant account, they do not get it back so why should you.
        al

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        • Profile picture of the author agmccall
          Originally Posted by ravijayagopal View Post

          PayPal is the merchant here. They're not built on top of, or depending on another third-party merchant service or gateway like Authorize.net, for eg.

          So they're not like a ClickBank or Patreon in that sense. So PayPal actually does pocket the 2.9% (of course they have their backend expenses and such, but that's besides the point).

          l
          This is from merchant maveric
          "Actually... no. PayPal isn't a merchant account provider. It's a third-party processor, and it aggregates all of its seller accounts into one large merchant account. This is a fairly common practice, and one that's used by Square and Stripe (which powers solutions such as Shopify Payments)."

          PayPal used to give that 2.9% back - which they charged and pocketed previously.

          And now they won't.
          Again, they should not have to give you a refund on that. I am not sure what is so hard to understand that a processing fee is not negated because someone wants a refund.

          I am not sure if square and stripe or any of the others that follow the same business model refund processing fees. But, if they do it is only a matter of time before they realize how much they are losing by doing so

          al
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          • Profile picture of the author Frank Donovan
            Originally Posted by agmccall View Post

            I am not sure what is so hard to understand that a processing fee is not negated because someone wants a refund.
            I don't get it either. PayPal charges a fee for processing a transaction. It's not PayPal's business to underwrite a merchant's returns policy or guarantee a buyer's satisfaction with that merchant's product or service.

            It's like expecting UPS to return the shipping costs to the merchant if a buyer wants a refund.
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  • Profile picture of the author ravijayagopal
    PayPal getting greedy sucks. Even dumbass legacy processors don't do this - yet. But as a seller, not everyone can simply quit PayPal because of this.

    Depending on the niche and market, some people around the world will not buy from you if you don't offer PayPal. I've seen it many times during my 22 years of selling online.

    If I go from clicking on a great ad to a great sales page, and I don't know the seller, their brand or their website, even if they're selling something I really want, if they don't offer PayPal, then I'm probably not buying it, because I don't know or trust the brand enough to enter my credit card details on this unfamiliar ecommerce site. So others think about this too, because credit card fraud and identity theft is a pretty big issue to ignore.

    So I've lost count of how many times I've wanted to buy a digital or physical product, but ended up not buying because they didn't offer PayPal, which offers me a way to pay securely without exposing my credit card and home address.

    If you're a seller, then you're better off paying higher fees than lose the entire sale.

    But depending on your niche, and the price, if you're selling a physical product in a market that tends to have higher refunds, the extra 3% you lose with each transaction can add up over time.

    Now, that doesn't mean we have to be happy about it. This opens the door for someone else to disrupt PayPal. And that day will come. Until then, if you can, continue offering PayPal for your members and buyers, and keep looking for better options.

    #costOfDoingBusiness

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  • Profile picture of the author tagiscom
    Originally Posted by seobro View Post

    Paypal is not my pal anymore. OK, so Paypal collects fees on refunds now. This is a major pain. I like to offer a 30 day money-back guarantee. Well, what are your thoughts on this new one?

    https://www.theverge.com/2019/9/20/2...rs-controversy
    Originally Posted by DWolfe View Post

    Interesting article, I use paypal for ebay but do not see this update from them.
    I could probably handle that, but it is or was the 100% chargeback occasional costs that l don't like.

    Or some lowlife goes to a giraffe site, grabs a credit card number, then buys something from you, and the original card owner then contacts you a does a chargeback on their card, and you are stiffed with the Paypal bill.

    This doesn't happen all of the time, but it does eat into costs when it happens.

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  • Profile picture of the author toysoldier80
    I am surprised PayPal cannot find another way to earn income and revenue. Does not make sense as a business policy to accept any type of revenue for a product or service that may not be to the customers liking. I know people return things all the time. However, there are cases where returns are neccessary for a variety of reasons, and there should be a LAW not allowing PayPal to accept these refunds due to some of these serious reasons. PayPal should go out of business and not put the costs onto the sellers and customers to try and stay in business. Are they afraid to file bankrupcy because they have been so large for so long? Instead they put the costs onto the seller and customers??? Does not make any sense. You can fire people who are not working hard, take pay cuts, downsize in other ways. Its lazy and just an easy way to increase income by charging for refunds.
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    • Profile picture of the author webcontent
      Charges of Paypal were already higher as compared to other channels and low conversion rate was another sucking element in the past. With this new update, now Paypal gets more options to put a pressure on the merchant.

      Matters not how good Paypal is, what matters most is convenience. We have seen the markets crash due to the entry of Amazon, Flipkart, Alibaba etc. So, let's wait for another good rival of Paypal to enter and then we will see how these "JUSTIFIED CHARGES" as mentioned by few above, may get converted into "UNJUSTIFIED CHARGES"
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  • Profile picture of the author tagiscom
    Originally Posted by agmccall View Post

    They do not pocket the 2.9% that was paid to the merchant account, they do not get it back so why should you.

    Everybody that does not like this should get their own merchant account. Oh yeah, I forgot to mention it is $30.00 per month for a general merchant account plus the percent per sale and that is for Visa and Master Card. If you want to accept American Express and Discover there is another fee plus percentage. And if a customer refunds you do not get that percent per sale back, that is a processing fee. If a customer refunds it does not mean the "process " did not happen.

    al
    I tried to go for a merchant account once, but the paperwork was a nightmare, (provide, a bank statement with a bank stamp, etc) but there was no mention of a monthly cost.

    I got a fair way through, gave up, and tried to complete it, some time later, but their software had kittens, and to make a long story short, l gave up on that, and immediately got a normal account.

    But l read through their TOS,and no mention of any cost, so it might be free in AU.

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    • Profile picture of the author agmccall
      Originally Posted by tagiscom View Post

      I tried to go for a merchant account once, but the paperwork was a nightmare, (provide, a bank statement with a bank stamp, etc) but there was no mention of a monthly cost.

      I got a fair way through, gave up, and tried to complete it, some time later, but their software had kittens, and to make a long story short, l gave up on that, and immediately got a normal account.

      But l read through their TOS,and no mention of any cost, so it might be free in AU.

      You could try paypal payments pro with gateway. You can access it from your paypal dashboard. It is an actual merchant account and when customers pay they do not see paypal anywhere. I used it for years when I had my ecommerce site and it worked great. Still have to provide some documents but nothing like a merchant account with a bank

      al
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  • Profile picture of the author Dshu
    Yes PayPal has decided to once again collect a fee when a seller issues a refund.

    I have read their refund policy on their website. You can check their refund policy at this Link.

    https://www.paypal.com/uk/smarthelp/...efunds-faq3214
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  • Profile picture of the author Arlene Lasala
    yes it is. I read a news about it. They will pocket about 2.9% commission fees.
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  • Profile picture of the author Kay King
    PayPal has decided to once again collect a fee when a seller issues a refund.

    Not true - did you read the page you linked to? PP does not collect a fee on a refund....it does not GIVE BACK the fee it charged to process the sale.



    yes it is. I read a news about it. They will pocket about 2.9% commission fees.

    Paypal will PROCESS THE SALE - transfer the payment from buyer to seller's acct.


    THEN - in a return - Paypal will PROCESS THE REFUND -transfer the payment back to buyer


    It seems some expect paypal to do TWO transactions....for free. How about making your product/service so good that refunds are rare - how about building the cost of refunds into your costs of doing business?
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  • Profile picture of the author ctoyun
    The policy has no effect on buyers, they can buy goods as usual and request a refund. On the contrary, it is a major blow to those who use PayPal to sell goods.
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    • Profile picture of the author Medon
      Originally Posted by ctoyun View Post

      The policy has no effect on buyers, they can buy goods as usual and request a refund. On the contrary, it is a major blow to those who use PayPal to sell goods.
      So in a way, the seller gets charged twice: during the buying process and when the customer requests for a refund. It's punitive right?
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      • Profile picture of the author Frank Donovan
        Originally Posted by Medon View Post

        So in a way, the seller gets charged twice: during the buying process and when the customer requests for a refund. It's punitive right?
        That whooshing sound you can hear is from the points made in this thread flying over your head.
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      • Profile picture of the author Bkelly301
        I'm a cheap *******. I refuse to use ATMs other than my own bank, just to avoid the $2 transaction fees.

        This new PayPal policy pisses me off.

        I don't get many refund requests, but when I do I'm more annoyed at the fact that they are keeping the $3 transaction fee then I am about losing the initial sale.
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        • Originally Posted by Bkelly301 View Post

          I'm a cheap *******. I refuse to use ATMs other than my own bank, just to avoid the $2 transaction fees.

          This new PayPal policy pisses me off.

          I don't get many refund requests, but when I do I'm more annoyed at the fact that they are keeping the $3 transaction fee then I am about losing the initial sale.

          Have you been looking into any alternative?
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          • Profile picture of the author Bkelly301
            Originally Posted by Liangteng Tianjie View Post

            Have you been looking into any alternative?
            Hey a little late with the reply here, but to answer your question...no, I don't. Everything integrates with paypal and stripe super easily. Plus as Kay King pointed out, they aren't working for free, so I'm sure any alternatives out there would charge a refund fee as well. It's not worth the bother to sweat the small stuff (although, I'll still quietly complain everytime I lose that $2 from the refund!!)
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  • Profile picture of the author Kay King
    You are looking at it wrong - it's not paypals fault the customer refunds - paypal did the work of transferring the payment to you - and then back to customer. Paypal does not work for free - resenting something that makes sense from a business standpoint is a waste of energy.
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    • Profile picture of the author Bkelly301
      Originally Posted by Kay King View Post

      You are looking at it wrong - it's not paypals fault the customer refunds - paypal did the work of transferring the payment to you - and then back to customer. Paypal does not work for free - resenting something that makes sense from a business standpoint is a waste of energy.
      You're 100% right, but I still do get annoyed though.

      Then again, I'm the kind of guy that would drive 20 miles to my bank, just to avoid paying an ATM fee. Ultimately, I waste more time and use more gas...but I sleep better knowing that I didn't waste $2 on that damn ATM fee. I'm weird like that!
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  • Profile picture of the author Jonathan S
    Wow! I don't know that... I've recently done a refund and Paypal has deducted nothing from me, or maybe I was just a bit lucky to get away?
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  • Profile picture of the author Kay King
    just a bit lucky to get away

    If you were the buyer, it would not affect you..
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