Paypal Fees? What a Joke!

by WillR
32 replies
Recently I required the services of a third party. After we discussed the project at length I was ready to hit the buy button when I was told he did NOT accept Paypal. I was surprised. I apologized and told him I would be unable to work with him since I really needed to pay using Paypal. At that moment he then went on to tell me I COULD use Paypal if I really needed to but I would need to pay him an extra 3% to cover his fees.

What the?! Since when have Paypal fees become the responsibility of the buyer?

Might I also add, this is NOT the first time this has happened to me.

I also used to work in hotels and I remember all too often hearing our reception staff telling guests upon checkout that to pay with a credit card would incur an additional 2% surcharge. You're kidding right?!

I liken this to walking into a bakery and ordering a loaf of bread. The young lady behind the counter tells me the loaf of bread is $2.50 but an extra 10 cents as well because of the electricity needed to make my bread.

Seriously?!

News flash people. In business, this is what's known as an EXPENSE. It is a cost of doing business. Just like the bakery doesn't charge me extra for electricity neither should anyone be charging additional Paypal fees or fees for using credit cards. It is up to the business to price their products and services accordingly so that additional fees are not required. No one likes going to pay for something and finding hidden extras - it's a quick way to lose business.

What also amazes me is that the person I was originally looking to do business with was willing to let me walk on the count of a small 3% fee. So whereas if we had gone ahead with the project he would be 97% up, he decided to turn down the project and be 100% down. He is actually losing out a lot more by not accepting my business.

Sometimes it amazes me how others run their business. Have you encountered anyone trying to push their expenses on to you?
#fees #joke #paypal
  • Profile picture of the author Norfolk
    Not in the IM world. But credit cards? All the time. Most commonly it's just surcharge, but some business strictly ban credit cards below certain money threshold.
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  • Profile picture of the author onegoodman
    since when paying PayPal fees is buyer responsibility ? until today in any transaction (regardless if I am buyer or seller), the seller is the one who get the heat.
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  • Profile picture of the author Venturetothetop
    Yes, you are correct it is an 'expense' but why should the owner raise the prices for everybody when it is only a certain type of customer causing the costs?

    As for your bakery example,every product uses the electricity so that cost is shared fairly, but in this example why should non fee incurring payments have to subsidise the cost of Paypal fees? They pay more to help cover your cost...

    There could be an argument here that the business owner should really raise prices across the board and help avoid the feeling/frustration you are experiencing, but if the business is cutthroat, then every penny can make the different between a sale and a customer walking away. Either the extra 3% cost or the way it was communicated made you walk away, so it seems to me that the business was very price sensitive... (By the way, freelance sites all use this same - pay extra for Paypal fees costing)

    Just saying, that there are two sides to this argument...
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    • Profile picture of the author sbucciarel
      Banned
      Originally Posted by Venturetothetop View Post

      Yes, you are correct it is an 'expense' but why should the owner raise the prices for everybody when it is only a certain type of customer causing the costs?

      Just saying, that there are two sides to this argument...
      ^^^^
      Yep. Quite common for graphic design projects. If the price is set, that's the price of the project... not 3% less and not 3% more. He said he didn't do business via Paypal to avoid those fees but would make an exception if you paid the fee. Sounds reasonable to me.
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      • Profile picture of the author Kay King
        Buyers who pay "surcharges" or "fees" are not uncommon. Paypal says you can't require it - becuase of ebay. Stores may not charge for use of a credit card - but many will give a discount if you use cash because the surcharge is built into the pricing.

        I have two writing clients who pay my paypal fees on top of the cost of services - at their own suggestion. It's not unheard of in the service industry and seems more accepted in some areas of the world than others.

        kay
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        • Profile picture of the author philhunter
          You could send it to him as a gift or 'masspay' that way the fees are greatly reduced/almost eliminated, the only problem with masspay is that you need to have the funds in the account to do that but otherwise its a win win for both parties.
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      • Profile picture of the author bluetechseo
        I do agree with your thread, it still amazes me how people can turn down business like that.

        Just out of interest what was the other form of payment?

        Is there really a payment method in the world that doesnt incur an average fee of 2%?

        The only one I know of is the same bank to bank transferrs.

        To actually stick up for this guy though maybe he is fed up of paypal and their fees, I pay a small fortune to them and in return I get crappy customer service, good old paypal.
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  • Profile picture of the author Vlad Romanov
    Like you said it's business, he can ask for whatever the he'll he wants. You as the buyer can reject or accept his offer. Until he starts losing clients over the three percent, his opinion of him will be irrelevant to him lol... And also there is no predefined law as to who should assume that fee

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  • Profile picture of the author zamzung
    That strange attitude of some people is what surprises me too pretty often... while Venturetothetop could be right when saying that such a deal causes an additional expenses to owner which are not "normal" for him, I would say that you need to be prepared for such a situations if you are doing business... also, that owner went from "I can't accept Paypal" to "I will accept Paypal but..."... now, that sounds strange to me... especially if we count in that he let you go for a small fee...
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  • Profile picture of the author BIG Mike
    Banned
    https://cms.paypal.com/us/cgi-bin/?c...cale.x=en_US#9. Restricted Activities.

    "4.6 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions."

    The seller in this case is violating PayPal's User Agreement...it's pretty much black and white.

    I thought (might be wrong) that this was a standard policy with Credit Card companies as well.

    More to the point, PayPal or other fees are really subjective when it comes to pricing goods and services. Like electricity and any other overhead expenses, you build them into your pricing structure.

    Will's point about losing revenue over a niggling 3% is the important issue here. That smacks of someone who's either a miserly ****weasel or incredibly naive about conducting business in the real world.

    The seller also has some options here - he could have asked for payment via Mass Pay, which places the fees if any on the buyer anyways. He could have asked up front about the payment method before giving a price too, if it was really that important.

    Incidentally, using the PayPal API, sellers can decide who will pay the fees - they can be assigned to the buyer, the affiliate or split among the receivers.

    At the end of the day though, I think I'd rather lose 3% or whatever the fee was (which I can expense off), than lose the entire payment.
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    • Profile picture of the author Daniel Evans
      About 12 years ago a lot of people on Ebay would state that if you wanted to pay by PayPal you'd have to add extra to the postage to cover fees.

      Funny times!
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      • Profile picture of the author Damielle
        Its unbelievable that people will give up 97%, which is the cost of doing business without PayPal. They think the cost is 3% but the fact its without offering PayPal as a payment option you will probably lose the sale entirely as was the case here.

        Its ridiculous when you can simply price your products to cover these cots
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  • Profile picture of the author globalpro
    Just out of curiosity, what was the option they originally wanted you to pay with? Merchant account?

    Compared to a lot of payment processors, PayPal's fees aren't all that bad. But I am sure the person is paying some kind of fees if they are taking payments online. Apart from paying cash, just about every exchange of payments has some kind of fee involved, whether obvious or hidden (built in).

    Doesn't make sense.

    Thanks,

    John
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  • Profile picture of the author JoeDRL
    That's wierd, the guy really turned you down for 3% compared to 97% of money that could be in his account right now?

    Some people don't seem to count numbers right...

    Also, I think it is your duty to accomodate your customers when they need a payment option, people are so egocentric today it's crazy how they want to squeeze every penny out of you and if they have to give service they will try to do it.

    Just a tought,
    ~ JoeDRL
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  • Profile picture of the author JeremiahSay
    This kind of person are not worth doing business with.

    He's so selfish with the 3% transaction fee.. what's more if you were to ask him for more information, guess what he'll say? My guess: "Oh you want that information? That will be an additional $50/= + 3% to my paypal account! ty"

    In business we talk about win-win situation. With this kind of person it's often lose-win situation, and the loser will prolly be you..

    God Bless,
    Jeremiah
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  • Profile picture of the author webmazter
    You have just bumped into the Christmas Scrooge here is his definition:Scrooge is a cold-hearted, tight-fisted and greedy man, who despises all things which give people happiness....................lol

    Its like a speedway lol you got to purchase something over $3 before you can use a credit card because the merchant gets charged..........lol what has this world gotten too!
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  • Profile picture of the author Steven Miranda
    I have seen this too and I agree that the fees are a business expense and should stay with the merchant.
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  • Profile picture of the author Jeff Parker
    Yeah any good program owner will take the fees into consideration. And unless they are sending you physical product a small fee does not really matter.

    On the other side of things Paypal's fees are getting higher. They reported a $2.4 Billion earnings from fees in 2010. As a program owner that is why developed an alternative payment system for program owners that does not charge any fees.
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    • Profile picture of the author Kay King
      This is silly - you don't define good and bad buyers and sellers by who pays a small fee. Some freelance sites now have the option to add their fees to the buyer's cost so it's not unheard of.

      You negotiate if you want to use that person for the work. Offer a 3% bonus if the work is completed on time - or adjust the cost to split the fees.

      If it's a major issue - get someone else to do the work who won't have a problem with paypal fees.

      kay
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  • Profile picture of the author Saito
    I think anyone whose business is upset by a 3% change to their bottom line really needs to re-examine what they are doing.

    Screw that guy! When you sell stuff on the web, you can expect to pay 3-4% to process payments. What is Paypal...1% more expensive than merchant accounts?

    Tell him to quit whining and letting his scarcity mindset interFEAR with his business. Time to man up, or at least join the 21st Century.

    I will admit it sucks, though, when accepting large amounts like $1000-2000 but in those cases you can try Dwolla or something. Or make 3% more revenue, which is probably the best way to solve this perceived problem.
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  • Profile picture of the author Alfredo Carrion
    I see this all the time when working with spanish freelancers in a popular forum. They use to give a "neto" quote (which means how much they want to receive after the Paypal fees). That forces the buyer to calculate how much to send (the fees vary by country) and makes buying a simple article pack a pain in the ***.

    The sad thing is that in our spanish version of the PayPal User Agreement, there's nothing about the no surcharges policy :-(
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    • Profile picture of the author rts2271
      A lot of hyperbole from the Paypal fanboys here.

      You ever seen a gas station have a price for cash and a price for credit card?
      How about restaurants?

      It's done all of the time in brick and mortar. It really should be done online as well. Credit card companies do not impose limitations of charging a surcharge for card users in a retail environment. Paypal can limit this behavior through it's TOS, but check out Walmart, who charges a internet "fee" for using paypal or credit card through their web site.

      As a retailer and in low margin industries, do you raise your price across the board for all services or do you charge the ones with a higher cost of transaction to increase? This is a business by business decision. Gas stations made the choice and the majority tack on about 4 cents per gallon of gas.

      Internet businesses are in the process of having barriers of entry installed similar to retail mechanisms. It will reduce fly-by-nights and scammers. It will level the playing field a bit more in favor of retailers. State sales taxes, merchant fee's and business licensing will all be mainstream within 10 years. And it wont break or kill internet business, just purge some of the half-assed wannabees from the markets.

      I generally charge a 5% fee for certain transactions, Paypal included for the pain and suffering I incur using those horrible systems. It encourages people who really want to do business with me to find alternatives or suffer along side of me. It also is a statement from my business about how I feel about Paypal and certain merchant systems. I have never lost a moments sleep thinking oh noes I lost a client cause they won't pay my fee. There is nothing in their TOS that stops me from charging a usage fee. Quote their TOS all you want but the reality is they can't and won't stop it.

      If 3% or 5% or whatever is a deal killer then perhaps the deal should be killed. That's like arguing over a 15% or 20% tip.
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  • Profile picture of the author TheTruth2011
    I am also curious as to what service he did want you to use?
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    • Profile picture of the author rhinocl
      I see this two possible ways. A) The provider was being dumb and you are better off without him.
      B)He's in a strong position because he does great work and you just should have ante-ed up the extra 3%.
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  • Profile picture of the author virtualprincipal
    Paypal fees can hurt. I had an offline client pay me $1200 through paypal and it costs me close to $40. Somehow that doesn't seem fair to the person delivering the product....
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  • Profile picture of the author GarrieWilson
    Credit card companies do not impose limitations of charging a surcharge for card users in a retail environment.
    Actually, they do.

    Places are either breaking their merchant agreement OR giving a CASH discount.

    They can not say if you pay with a CC you are charged more. They can, however, say if you pay with cash you will be charged you less.

    Charging Customers a Fee to Pay with a Credit Card

    They are also not allowed to set a minimum for using a CC.

    -g
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    • Profile picture of the author Alexis Barnabe
      Originally Posted by GarrieWilson View Post

      Actually, they do.

      Places are either breaking their merchant agreement OR giving a CASH discount.

      They can not say if you pay with a CC you are charged more. They can, however, say if you pay with cash you will be charged you less.

      Charging Customers a Fee to Pay with a Credit Card

      They are also not allowed to set a minimum for using a CC.

      -g
      Here's how I would do it.
      One time payment:
      100$ for this pair of shoes.
      If you pay cash/debit you get a 3$ discount so 97$.

      Reccuring payment
      Same goes for reccurring fee 100$/months.
      97$ if you are on automatic credit card payment.
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  • Profile picture of the author George Wright
    Good point Gary,

    And charging less is a big hassle for most businesses. Charging a "surcharge" is much easier, however I never pay the surcharge and I've, so far gotten 3 businesses to take down their "We charge $00.XX for using your credit card."

    Besides being against the CC TOS it's illegal in many States in the U.S.

    Here is what I do. When "informed" that they are going to add $00.75 or whatever If I use my CC I simply say, "Do you know it's against the law and against the rules of Master Card for you to charge me that?" "However, I won't use my card if you reduce my bill 5%."

    I've never been charged the fee, no argument no discussion at all. On the other hand I've never had my bill reduced either.

    And as I said, in 3 cases restaurants have taken down their "surcharge" sign.

    Now, debit cards are another story, but most merchants don't distinguish between Debit or Credit cards and the businesses I mentioned that stopped the surcharge stopped it on Debit cards also.

    I did read once that it's against PayPal's TOS to add a surcharge for using them, however I don't care about that because when I'm spending PlayPal money I don't watch it that close, but that's just me.

    George Wright
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  • Profile picture of the author Guru_Marketing
    You want to pick carefully your customers. If someone raises their hand and buy things from you, it does not mean they are qualified to do business with you.

    You have to be picky with your customers, because the repeated ones make your business running over a longer period of time.

    Today, a lot of people are after the sale. They have little or NO concern of what's going to happen AFTER the sale. If someone wants to push their expenses on you, it's usually a red flag. Choose your customers, do not let them choose you - because it's a RELATIONSHIP. This is what you are selling after all...

    Chris D.
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    • Profile picture of the author George Wright
      Chris,

      It's not the customers who are pushing their charges on the seller, it's the sellers who are pushing their fees on the customers. Or did I miss your point?

      Originally Posted by Guru_Marketing View Post

      You want to pick carefully your customers. If someone raises their hand and buy things from you, it does not mean they are qualified to do business with you.

      You have to be picky with your customers, because the repeated ones make your business running over a longer period of time.

      Today, a lot of people are after the sale. They have little or NO concern of what's going to happen AFTER the sale. If someone wants to push their expenses on you, it's usually a red flag. Choose your customers, do not let them choose you - because it's a RELATIONSHIP. This is what you are selling after all...

      Chris D.
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      • Profile picture of the author Guru_Marketing
        Originally Posted by George Wright View Post

        Chris,

        It's not the customers who are pushing their charges on the seller, it's the sellers who are pushing their fees on the customers. Or did I miss your point?
        Perhaps you are right :-) maybe I misunderstood something. It has been a long day
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