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Paypal to keep fees on refunds as of 24th Feb 2014

by Mr Bill
26 replies
Just received this email from Paypal informing me that from 25th of Feb they will no longer be refunding fees when I issue a refund.

...We’ve made some updates to the following agreements and policies:


- User Agreement
- Combined Financial Services Guide and Product Disclosure Statement
- Electronic Fund Transfer Rights and Error Resolution
These changes will be effective as of 25 February 2014.

Who do the changes affect?

The latest changes will mainly affect users who issue refunds on Commercial Transaction payments and users who receive eCheques.

What are they?

The main changes to our agreement and policies relate to the following fees:

-
We will start to retain the fixed fee portion of the Commercial Transaction fee. We’ve added examples to help you understand the change; and -
We will be increasing the cap for receiving eCheque payments based on payment currency. ...

Where can I see the details?

The full details of our policy updates are published on our website. To stay safe from phishing, we recommend you always type our URL into your browser instead of clicking links in emails.

Visit the PayPal site by typing http://www.paypal.com.au into your browser address bar. Click Legal at the bottom of the page and then Policy Updates.
Not sure what to think. I can't feel really very sorry for Paypal given the trillions they make but I always thought they were being generous when they also refunded my fees when I refunded people (for whatever reason) but now I think I'll have to consider tightening up my refund policy to reflect the fees I'm going to have to pay to refund them. If I have to draw cash from my bank that also incurs bank transactional fees.

For small items it might not be much but for larger items (like coaching fees that sometimes go into the thousands) it's going to be a sizable cost.

I can see some refund policies tightening up or adding "less fees" into the refund equation - not sure how that'll work though. It's been so long since I had to refund anyone...can a refund be limited to a portion of the transaction? I can't remember.
#2014 #24th #feb #fees #paypal #refunds
  • Profile picture of the author Zeus66
    In the US, they limit the refund period to 60 days, I believe. And yes, you can do a partial refund and Paypal automatically calculates the refund amount for that portion of their fees.
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    • Profile picture of the author Mr Bill
      Originally Posted by joecason View Post

      Thanks for the share Mr. Bill, I was unaware this was going to happen. I am not worried too much, but to those who are, this is a good opportunity to provide high quality content, because if you do not, you will lose money.

      To answer your question, a refund can be limited to a portion of the transaction, just make sure they are ok with that.

      Also, digital goods are not supported by the new protection promise, so refunds will be out of your own good will. I will still give them though, do not want negative reviews

      Originally Posted by Zeus66 View Post

      In the US, they limit the refund period to 60 days, I believe. And yes, you can do a partial refund and Paypal automatically calculates the refund amount for that portion of their fees.
      Thanks, wasn't sure but I thought so.
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      • Profile picture of the author wakizashi99
        Another moneygrab from the good folks at Paypal...
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        • Profile picture of the author Alex Blades
          I think I'll have to consider tightening up my refund policy to reflect the fees
          No need to ruin your relationship with your customers over some companies greed. I haven't gotten the email, but if this is the case, then it will be part of doing business with Paypal.

          Thanks for the share, I was unaware this was going to happen. I am not worried too much, but to those who are, this is a good opportunity to provide high quality content, because if you do not, you will lose money.
          There will be no change in quality of product, it will just be a numbers game like it's always been, they will still make money hand over fist
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  • Profile picture of the author GforceSage
    The more you push people away with unpopular moves, the closer you unknowingly push them towards another business. The ebay/paypal people are so big, they don't realize or maybe they don't care that they send folks looking for alternatives with every suspect move they make, and in turn, have loyal customers begin to diversify themselves.
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  • Profile picture of the author Mr Bill
    We're ahead of you in Australia so maybe it's scheduled to go out at lunch time on the 23rd all around the world. You'll probably get it tomorrow if not sooner.
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  • Profile picture of the author Kate Smith
    I am almost hoping they keep doing these types of things, so that a legitimate competitor can start to emerge. Right now, PayPal is still the payment processor that people feel the most confidence using.

    I'm definitely looking forward to seeing some major competition for them in the next few years.

    Kate
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  • Profile picture of the author rwbovee
    Isn't that kind of like stealing?
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    • Profile picture of the author Mr Bill
      Originally Posted by rwbovee View Post

      Isn't that kind of like stealing?
      No. They provide a service which has been used - the transfer of funds. What we do with it (take it, give it back) is our own affair. They could also charge us for the return as that is also a transfer of money. I wonder what the credit card companies do? Pretty sure they don't refund any charges on a return...or do they?
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      • Profile picture of the author Danny McConnell
        I can certainly see Paypal's logic in doing this, and you gotta wonder about the cost to them of a huge launch with astronomical refund rates.

        But for all the little people, you have to wonder about the PR cost.
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        • Profile picture of the author William Martin
          What's that banging sound?

          Could it be PayPal hammering another nail into its own coffin?

          Whilst it may be entirely reasonable for PayPal to not refund fees on transactions, it is the cumulative effect of all these little changes that invite businesses like Stripe to take bites out of their market share.

          Can't happen too soon for me.

          Just like IBM and Microsoft before them, it is time their complacency brought some serious alternatives onto the scene.
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          • Profile picture of the author JohnMcCabe
            First off, if you actually read the change, they say they will keep only the fixed portion of the transaction fee. I know these aren't the right numbers, but it saves me from looking them up and I can do the arithmetic in my head...

            PayPal's transaction fees are a fixed amount plus a percentage of the sale amount. Let's say that it's a flat amount of $0.50 + 10%, regardless of sale amount. (Again, check with PP for the correct numbers.)

            You sell a widget for $10. PP's fee would be $0.50 + $1.00 = $1.50.

            You refund the item. PP keeps the $0.50 fixed portion of the fee.

            If that's going to sink your business, you have bigger problems than this change.

            I find it kind of ironic that "Warriors" who will grub for every last nickel will whine, whinge and complain when another company takes a step to get paid for providing a service.

            If your margins are so thin and your refund rate so high that this change really hurts, good. Maybe you should be thinking about a career that involves a hairnet and a name tag...
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            • Profile picture of the author Ricardo Furtado
              Originally Posted by JohnMcCabe View Post

              First off, if you actually read the change, they say they will keep only the fixed portion of the transaction fee. I know these aren't the right numbers, but it saves me from looking them up and I can do the arithmetic in my head...

              PayPal's transaction fees are a fixed amount plus a percentage of the sale amount. Let's say that it's a flat amount of $0.50 + 10%, regardless of sale amount. (Again, check with PP for the correct numbers.)

              You sell a widget for $10. PP's fee would be $0.50 + $1.00 = $1.50.

              You refund the item. PP keeps the $0.50 fixed portion of the fee.

              If that's going to sink your business, you have bigger problems than this change.

              I find it kind of ironic that "Warriors" who will grub for every last nickel will whine, whinge and complain when another company takes a step to get paid for providing a service.

              If your margins are so thin and your refund rate so high that this change really hurts, good. Maybe you should be thinking about a career that involves a hairnet and a name tag...
              Thanks for taking the time and the trouble to explain this John.
              Best wishes and regards.
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  • Profile picture of the author yakim1
    I believe this does not affect the customer at all. PayPay charges you account with transaction fees. I believe the vendor will not be receiving these transaction fee back.

    so the vendor is the looser and not the customer.

    Best regards,
    Steve Yakim
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  • Profile picture of the author Mr Bill
    Well, that's better news and of course it's not about going broke over a small fee. I thought it was news worthy because at the moment they give everything back which I always thought was a nice gesture.
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    • Profile picture of the author JohnMcCabe
      Originally Posted by Mr Bill View Post

      Well, that's better news and of course it's not about going broke over a small fee. I thought it was news worthy because at the moment they give everything back which I always thought was a nice gesture.
      Bill, my comments were not aimed at you.

      They were aimed at the commenters who seem to think this huge corporation is some kind of malignant spirit with a personal vendetta against them.

      For those who simply don't understand how a service business like this (and PayPal IS a service business) works, here's a fun intro:

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  • Profile picture of the author Raydal
    There are a ton of businesses who do not offer full refunds. They
    cloak this in language such as "full refund less restocking fee" for
    example. Or you may lose your shipping cost. I don't think this is
    going to be earth shaking if you explain your refund as less Paypal's
    transaction fee.

    -Ray Edwards
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    • Profile picture of the author Dan C. Rinnert
      A refund is a transaction. Businesses with merchant accounts have been paying transaction fees on refunds for probably as long as they've had their account. But now that PayPal is going to start charging them, the sky is apparently falling?

      As some have mentioned, you could certainly add a disclaimer to your refund policy, but I think it would reduce sales. If someone promotes a $17 product with a "100% money-back guarantee" but with an asterisk noting "except for a 30¢ transaction fee", I will pass. To lose money, the vendor would have to have something like a 98% refund rate. If they're not confident enough in their product that more than 2% of their buyers won't be fully satisfied with their purchase, I don't want to buy from them.

      If someone promotes a $500 product with a "100% money-back guarantee" but with an asterisk noting "except for a 30¢ transaction fee", that's going to look rather petty. Again, I wouldn't want to buy from them.
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  • Profile picture of the author Zeus66
    John McCabe... ever the voice of reason on this here forum.

    Does anyone know if this change has hit the US yet? Or is it just Aussieland so far?
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    • Profile picture of the author yakim1
      Originally Posted by Zeus66 View Post

      John McCabe... ever the voice of reason on this here forum.

      Does anyone know if this change has hit the US yet? Or is it just Aussieland so far?
      I receive a notice in PayPal Policy this morning but it was only regarding the PayPal debit card. there nothing about their refund policy.

      Best regards,
      Steve
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  • Profile picture of the author carlamae
    Just another reason to only offer quality products that people wouldn't dream of asking for a refund.
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    • Profile picture of the author Zeus66
      Originally Posted by carlamae View Post

      Just another reason to only offer quality products that people wouldn't dream of asking for a refund.
      Ahh, if only it were this easy. Problem is, you get serial refunders often (in the IM niche, at least). And you get people who are living beyond their means already and $7 is a big deal, so they refund just to save a few bucks.

      I'm not really complaining, mind you. We make the money back guarantees because it helps sell in the first place. It's just a cost of doing business when someone refunds what you know to be an excellent and helpful product.
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  • Profile picture of the author Nuno
    For as long as it's the fixed fee it's not much of a problem.
    Even quality products get refunds (lots of professional refunders around).
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  • Profile picture of the author NetCram
    That's funny I thought they were already doing that. When ever I get a refund I end up with less money then I started with. hmm
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  • Profile picture of the author absolutelee
    Just a cost of doing business. Although I don't do this, you don't have to refund buyers of digital products, according to PayPal. I refund buyers, myself. If they're serial refunders, I blacklist them.
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  • Profile picture of the author spearce000
    2checkout.com and others have been doing this for years. It was only a matter of time until PayPal caught up.
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