7 ms·

PayPal starts charging 2.9% for refunded sales

61 points by starbugs 7y ago

bdibs 7y ago
Good, more people leaving PayPal for a more seller friendly payment processor is great for everyone. They’ve been nickel and diming sellers forever, and it seems it’s finally catching up to them.
- Traster 7y ago
  Nickel and diming sellers is quite literally the payment processor business model. What else do you expect?
dominicr 7y ago
"PayPal has said that anyone who disagrees with any of their new terms is free to close their account." That's not much of a surprise as Paypal has never been strong on customer service for sellers. They seem to see the relationship as adversial, often claiming it's for the buyers' benefit. But both buyers and sellers are customers to value.
- mcv 7y ago
  I closed my PayPal account many years ago, but they keep mailing me updated terms. I haven't agreed with them in years.
  - NullPrefix 7y ago
    Send a GDPR request.
    - oliwarner 7y ago
      This! GDPR Subject Access Requests are a godsend for forcing non-compliant companies to come to terms with their shitty practices. I emailed an estate agent recently to request information about a listing. I immediately started getting regular "Have a house to sell?", "Interested in these listings?" emails. I had not requested these, or given permission. One SAR later and I've got a hand-signed letter from their legal department, promising to investigate (as required). A week later I got a lovely report of the bollockings and training that had been doled out in the local office. I've since verified with alternate details. They're behaving now.
      - mcv 7y ago
        Excellent idea. So, how do you actually go about sending such a Subject Access Request? Mail it to a random email address? Use their contact form? What if they don't have a contact form? (Google and similar companies are notoriously hard to contact, for example.)
        oliwarner 7y ago
        Companies of a certain size are required to have data protection officers, some publish details of those on their privacy pages (though I'm not sure if that's required). That's how I actioned this instance. Otherwise an email to wherever. The threat of ICO involvement is enough to motivate people to resolve errors quickly, because the ICO (in the UK) does take regular action at all levels (not just the big fish). https://ico.org.uk/action-weve-taken/enforcement/ https://ico.org.uk/action-weve-taken/enforcement/
BrockSamson 7y ago
From 7th May PayPal have lost my business, as has any business which uses paypal exclusively. This is a completely customer hostile stance and shows capitalism at its worst.
- gbaygon 7y ago
  Capitalism is free market which allows you to switch providers freely and, if enough people agree with you, it will eventually create a market force that will make PayPal step back or lose it's business. It may be greed and lack of sight from PayPal side, but capitalism tends to adjust itself.
  - mcv 7y ago
    The free market is one aspect of capitalism. The concentration of capital which can be leveraged to undermine the freedom of the market is another.
    - gbaygon 7y ago
      Isn’t the point of “disruption” so popular in startup culture to leverage the agility of smaller enterprises (and even a pitch used to rise capital) the tool to fight old paradigms? My point being that it isn’t “capitalism” fault, but that the markets are lagging behind the demand and it will fix itself eventually (again, see Stripe efforts in this matter for example).
      - mcv 7y ago
        PayPal is long past the startup phase, though. They're a very well established player, and as such they have power they can leverage. A lot of people feel bound to use PayPal despite disliking the way they operate. That by itself is a sign of the market not doing what it's supposed to do in the ideal case. Markets certainly don't always automatically fix itself. They require oversight and regulation, or else they tend to result in cartels and monopolies. The free market is great when it works well, but quite often it needs a bit of help.
  - 7y ago
mehrdadn 7y ago
Louis Rossmann had something to say about his: https://www.youtube.com/watch?v=c1WPDVjXDj0 https://www.youtube.com/watch?v=c1WPDVjXDj0
nickjj 7y ago
The problem with this scenario is customers don't know (or care) about things like this, so from their POV PayPal is the best thing ever and not supporting it will absolutely result in lost business. For reference I've sold many many thousands of digital courses and about 40% of the people who bought a course used PayPal (60% used a credit card where I'm using Stripe on the backend). But from the user's POV, they just like popping in an email address and getting what they want. It's especially important if you're a small business where the average person might not trust your platform or brand with their CC info. As developers we know things are secure if we use Stripe, etc.. but they don't know that. I realistically don't see how PayPal will ever go away in the foreseeable future. Zelle is a great step forward but it's no where near ready to replace PayPal for accepting arbitrary payments (but it's great for 1 on 1 payments when both banks support it).
- starbugs 7y ago
  If everybody stays with PayPal at this point and just accepts these practices, then I guess it won't be long before the other payment processors follow the market leader. I agree that you are likely going to lose some business in the short run, but is that business worth swallowing the refund fees with your own money? Also times have changed a bit. It's not like eBay is still the biggest market on the web and auto filling forms with your credit card information has gotten a lot easier thanks to modern browsers.
  - dexen 7y ago
    >it won't be long before the other payment processors follow the market leader Fortunately this goes both ways: On one hand, other payment processors will be able to squeeze even more revenue out of the sellers (or buyers). On the other hand, any competing payment processor will be able to collect more revenue to finance its growth, thus helping them to grow and out-compete PayPal. Contrast that with Amazon, which is ran very close to zero margins, thus making it harder for any competitors to generate growth-inducing revenue and at the same time offer competitive prices.
  - nickjj 7y ago
    Sadly it's not some business in the short run. It would be forfeiting probably 20-30% of revenue for 5+ years or however long it takes for the general population to stop using PayPal (if such a movement would even happen). It's not quite a 40% loss because I imagine if the PayPal option were removed a number of people would use the CC option instead of aborting the sale. Still though, that's a huge loss for an extended period of time. I definitely don't like what PayPal is doing but Stripe is also pretty evil in a similar fashion. If someone disputes a charge (due to fraud that Stripe is supposed to prevent but doesn't) then you lose the processing fee and you (the business owner) also get billed a static $15 fee on top of that.
bluedino 7y ago
I don't get this at all. Does it apply when you do a refund or only when the customer requests it?
- floatingatoll 7y ago
  It creates a financial disincentive to consciously fail to deliver reliably. If you ship 100 people a $100 product with a 5% defect rate, earning $10,000: Previously, you would refund 5 people $100 each, at a cost of 5 * $0.30 = $1.50 (effectively, 0.3%) + $500. Now, you would refund 5 people $100 each, at a cost of 5 * $2.90 = $14.50 (fixed at 2.9%) + $500. I imagine Paypal hopes that this increase in financial cost to refunds will diminish what, presumably, is an excessively high rate of refunds that resulted in the otherwise-unpopular rule change. Apple does the same for iOS app purchase refunds, except at their 30% rate instead of 2.9%, there is a much higher price to pay for selling something so bad that people manage to refund it (which Apple makes much more difficult than Paypal, from a pure UX perspective).
  - bluedino 7y ago
    I ran into this issue yesterday, which made me go back to check my account (who read their ToS?) I was selling a small item online, and a few people were inquiring about it. I said the first person I get payment from gets the item, I would not “hold” the item if another buyer wanted it. Person X sent me a payment, and an hour later so did person Y. I had to refund person Y so I lost what looks like 30 cents.
    - floatingatoll 7y ago
      They likely identified this pattern as a way for sellers to avoiding eBay fees and protections years ago when they were merged with eBay, and only now has the problem become financially relevant to solve. The fees for those refunds might well have been coming out of their pockets this whole time and none of us every knew.
dotdi 7y ago
> PayPal has said that anyone who disagrees with any of their new terms is free to close their account. And this is why we cannot have monopolies.
- oliwarner 7y ago
  Huh? Paypal is big but they're a long way from being a monopoly. Sellers need to show a little backbone. If Paypal is charging you for things you don't want to be charged for, cut them off. There are plenty of other payment service companies out there, and some of the smaller ones are going to give you a much better percentage on your business (assuming you're not high-risk).
  - HNLurker2 7y ago
    But will they fall the same way payza did?
segmondy 7y ago
Not a fan of paypal but can't fault them. Refund costs twice the work. There's the cost of the initial transaction, then the cost of a refund. If someone used a CC to pay and it went through the card's network, the card network will charge paypal for both the transaction and the refund. It's sort of like a physical return, if you shipped it, there's a shipping cost to and from the customer. Question becomes who should eat that cost? The payment processor, the seller or the buyer? Frankly. I don't believe it's the payment processor. If the buyer is the cause of the refund then they should eat the cost. If the seller is the cause, then the seller should. Unfortunately this is now how things are currently done, but that's how I personally feel about it.

61 points by starbugs 7y ago

Good, more people leaving PayPal for a more seller friendly payment processor is great for everyone. They’ve been nickel and diming sellers forever, and it seems it’s finally catching up to them.

Traster 7y ago
Nickel and diming sellers is quite literally the payment processor business model. What else do you expect?

dominicr 7y ago

"PayPal has said that anyone who disagrees with any of their new terms is free to close their account." That's not much of a surprise as Paypal has never been strong on customer service for sellers. They seem to see the relationship as adversial, often claiming it's for the buyers' benefit. But both buyers and sellers are customers to value.

mcv 7y ago
I closed my PayPal account many years ago, but they keep mailing me updated terms. I haven't agreed with them in years.
- NullPrefix 7y ago
  Send a GDPR request.
  - oliwarner 7y ago
    This! GDPR Subject Access Requests are a godsend for forcing non-compliant companies to come to terms with their shitty practices. I emailed an estate agent recently to request information about a listing. I immediately started getting regular "Have a house to sell?", "Interested in these listings?" emails. I had not requested these, or given permission. One SAR later and I've got a hand-signed letter from their legal department, promising to investigate (as required). A week later I got a lovely report of the bollockings and training that had been doled out in the local office. I've since verified with alternate details. They're behaving now.
    - mcv 7y ago
      Excellent idea. So, how do you actually go about sending such a Subject Access Request? Mail it to a random email address? Use their contact form? What if they don't have a contact form? (Google and similar companies are notoriously hard to contact, for example.)
      - oliwarner 7y ago
        Companies of a certain size are required to have data protection officers, some publish details of those on their privacy pages (though I'm not sure if that's required). That's how I actioned this instance. Otherwise an email to wherever. The threat of ICO involvement is enough to motivate people to resolve errors quickly, because the ICO (in the UK) does take regular action at all levels (not just the big fish). https://ico.org.uk/action-weve-taken/enforcement/ https://ico.org.uk/action-weve-taken/enforcement/

BrockSamson 7y ago

From 7th May PayPal have lost my business, as has any business which uses paypal exclusively. This is a completely customer hostile stance and shows capitalism at its worst.

gbaygon 7y ago
Capitalism is free market which allows you to switch providers freely and, if enough people agree with you, it will eventually create a market force that will make PayPal step back or lose it's business. It may be greed and lack of sight from PayPal side, but capitalism tends to adjust itself.
- mcv 7y ago
  The free market is one aspect of capitalism. The concentration of capital which can be leveraged to undermine the freedom of the market is another.
  - gbaygon 7y ago
    Isn’t the point of “disruption” so popular in startup culture to leverage the agility of smaller enterprises (and even a pitch used to rise capital) the tool to fight old paradigms? My point being that it isn’t “capitalism” fault, but that the markets are lagging behind the demand and it will fix itself eventually (again, see Stripe efforts in this matter for example).
    - mcv 7y ago
      PayPal is long past the startup phase, though. They're a very well established player, and as such they have power they can leverage. A lot of people feel bound to use PayPal despite disliking the way they operate. That by itself is a sign of the market not doing what it's supposed to do in the ideal case. Markets certainly don't always automatically fix itself. They require oversight and regulation, or else they tend to result in cartels and monopolies. The free market is great when it works well, but quite often it needs a bit of help.
- 7y ago

mehrdadn 7y ago

Louis Rossmann had something to say about his: https://www.youtube.com/watch?v=c1WPDVjXDj0 https://www.youtube.com/watch?v=c1WPDVjXDj0

nickjj 7y ago

The problem with this scenario is customers don't know (or care) about things like this, so from their POV PayPal is the best thing ever and not supporting it will absolutely result in lost business. For reference I've sold many many thousands of digital courses and about 40% of the people who bought a course used PayPal (60% used a credit card where I'm using Stripe on the backend). But from the user's POV, they just like popping in an email address and getting what they want. It's especially important if you're a small business where the average person might not trust your platform or brand with their CC info. As developers we know things are secure if we use Stripe, etc.. but they don't know that. I realistically don't see how PayPal will ever go away in the foreseeable future. Zelle is a great step forward but it's no where near ready to replace PayPal for accepting arbitrary payments (but it's great for 1 on 1 payments when both banks support it).

starbugs 7y ago
If everybody stays with PayPal at this point and just accepts these practices, then I guess it won't be long before the other payment processors follow the market leader. I agree that you are likely going to lose some business in the short run, but is that business worth swallowing the refund fees with your own money? Also times have changed a bit. It's not like eBay is still the biggest market on the web and auto filling forms with your credit card information has gotten a lot easier thanks to modern browsers.
- dexen 7y ago
  >it won't be long before the other payment processors follow the market leader Fortunately this goes both ways: On one hand, other payment processors will be able to squeeze even more revenue out of the sellers (or buyers). On the other hand, any competing payment processor will be able to collect more revenue to finance its growth, thus helping them to grow and out-compete PayPal. Contrast that with Amazon, which is ran very close to zero margins, thus making it harder for any competitors to generate growth-inducing revenue and at the same time offer competitive prices.
- nickjj 7y ago
  Sadly it's not some business in the short run. It would be forfeiting probably 20-30% of revenue for 5+ years or however long it takes for the general population to stop using PayPal (if such a movement would even happen). It's not quite a 40% loss because I imagine if the PayPal option were removed a number of people would use the CC option instead of aborting the sale. Still though, that's a huge loss for an extended period of time. I definitely don't like what PayPal is doing but Stripe is also pretty evil in a similar fashion. If someone disputes a charge (due to fraud that Stripe is supposed to prevent but doesn't) then you lose the processing fee and you (the business owner) also get billed a static $15 fee on top of that.

bluedino 7y ago

I don't get this at all. Does it apply when you do a refund or only when the customer requests it?

floatingatoll 7y ago
It creates a financial disincentive to consciously fail to deliver reliably. If you ship 100 people a $100 product with a 5% defect rate, earning $10,000: Previously, you would refund 5 people $100 each, at a cost of 5 * $0.30 = $1.50 (effectively, 0.3%) + $500. Now, you would refund 5 people $100 each, at a cost of 5 * $2.90 = $14.50 (fixed at 2.9%) + $500. I imagine Paypal hopes that this increase in financial cost to refunds will diminish what, presumably, is an excessively high rate of refunds that resulted in the otherwise-unpopular rule change. Apple does the same for iOS app purchase refunds, except at their 30% rate instead of 2.9%, there is a much higher price to pay for selling something so bad that people manage to refund it (which Apple makes much more difficult than Paypal, from a pure UX perspective).
- bluedino 7y ago
  I ran into this issue yesterday, which made me go back to check my account (who read their ToS?) I was selling a small item online, and a few people were inquiring about it. I said the first person I get payment from gets the item, I would not “hold” the item if another buyer wanted it. Person X sent me a payment, and an hour later so did person Y. I had to refund person Y so I lost what looks like 30 cents.
  - floatingatoll 7y ago
    They likely identified this pattern as a way for sellers to avoiding eBay fees and protections years ago when they were merged with eBay, and only now has the problem become financially relevant to solve. The fees for those refunds might well have been coming out of their pockets this whole time and none of us every knew.

dotdi 7y ago

> PayPal has said that anyone who disagrees with any of their new terms is free to close their account. And this is why we cannot have monopolies.

oliwarner 7y ago
Huh? Paypal is big but they're a long way from being a monopoly. Sellers need to show a little backbone. If Paypal is charging you for things you don't want to be charged for, cut them off. There are plenty of other payment service companies out there, and some of the smaller ones are going to give you a much better percentage on your business (assuming you're not high-risk).
- HNLurker2 7y ago
  But will they fall the same way payza did?

segmondy 7y ago

Not a fan of paypal but can't fault them. Refund costs twice the work. There's the cost of the initial transaction, then the cost of a refund. If someone used a CC to pay and it went through the card's network, the card network will charge paypal for both the transaction and the refund. It's sort of like a physical return, if you shipped it, there's a shipping cost to and from the customer. Question becomes who should eat that cost? The payment processor, the seller or the buyer? Frankly. I don't believe it's the payment processor. If the buyer is the cause of the refund then they should eat the cost. If the seller is the cause, then the seller should. Unfortunately this is now how things are currently done, but that's how I personally feel about it.