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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 w

by nickjj 8y 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 8y 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 8y 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 8y 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.
  - starbugs 8y ago
    And this is sadly exactly what the strategists at PayPal have calculated. I understand that losing that amount of business is painful, but on the other hand, in the long run it pays to have principles. I guess some businesses will try and put the fee on the customer.
  - pmiller2 8y ago
    The correct strategy for merchants here is to raise prices to cover these refunds. Ultimately, this will all fall on the backs of consumers, just like every other “cost of doing business” does. To put some sense of magnitude on it, according to https://appriss.com/retail/wp-content/uploads/sites/4/2017/12/2017_Consumer-Returns-in-the-Retail-Industry-Report.pdf https://appriss.com/retail/wp-content/uploads/sites/4/2017/1... the median percentage of retail sales refunded across all retail categories is 10%, so this translates to about a 0.3% increase in prices. Would you tolerate a 0.3% decrease in return on your investments in exchange for no additional benefit?
    - starbugs 8y ago
      If you can raise prices without losing business that sounds like a good idea. I doubt everyone can. Also there are big players in the market that don't support PayPal at all, e.g. Amazon.
  - neka 8y ago
- tssva 8y ago
  Not that I think PayPal's terms here are correct but they are far from the only payment processor with such terms. This is especially common with credit card processors that offer fixed fees, such 2.9% + 30 cents, and bundled processing instead of interchange plus pricing.
tssva 8y ago
Stripe's default terms also don't include refunding fees when processing a return, so unless you have negotiated terms with Stripe you are in the same boat there as you shortly will be with PayPal.
- Fjolsvith 8y ago
  Actually, you are in a better boat with Stripe. With PayPal, a customer can easily request a full refund without contacting the seller. With Stripe, they have to go to their bank and try to make a case for fraud. I used to have PayPal for my shed business which has an average of $4k for the transaction. A customer would order using PayPal and then call the next day to arrange immediate delivery, despite my store telling them we were backordered. They would get angry when I explained that, and request the refund. We got hit with fees both ways.
  - username444 8y ago
    I feel for you. I really do. I've been through this repeatedly. And it's a UI problem that's your job to fix, not the customer's fault. Here are some things you can do: - repeat the backordered message on every page: home page, category page, product page, cart page, checkout page - have them select a delivery date while adding the product - add messaging that the customer is "reserving their unit in priority sequence", not purchasing it - set it out of stock and harvest their email, with the promise to only use it to notify when it's back in stock All of these WILL HURT CONVERSION RATES, but that's the tradeoff for reducing return/refund rates.

by nickjj 8y ago

starbugs 8y 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 8y 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 8y 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.
- starbugs 8y ago
  And this is sadly exactly what the strategists at PayPal have calculated. I understand that losing that amount of business is painful, but on the other hand, in the long run it pays to have principles. I guess some businesses will try and put the fee on the customer.
- pmiller2 8y ago
  The correct strategy for merchants here is to raise prices to cover these refunds. Ultimately, this will all fall on the backs of consumers, just like every other “cost of doing business” does. To put some sense of magnitude on it, according to https://appriss.com/retail/wp-content/uploads/sites/4/2017/12/2017_Consumer-Returns-in-the-Retail-Industry-Report.pdf https://appriss.com/retail/wp-content/uploads/sites/4/2017/1... the median percentage of retail sales refunded across all retail categories is 10%, so this translates to about a 0.3% increase in prices. Would you tolerate a 0.3% decrease in return on your investments in exchange for no additional benefit?
  - starbugs 8y ago
    If you can raise prices without losing business that sounds like a good idea. I doubt everyone can. Also there are big players in the market that don't support PayPal at all, e.g. Amazon.
- neka 8y ago
tssva 8y ago
Not that I think PayPal's terms here are correct but they are far from the only payment processor with such terms. This is especially common with credit card processors that offer fixed fees, such 2.9% + 30 cents, and bundled processing instead of interchange plus pricing.

tssva 8y ago

Stripe's default terms also don't include refunding fees when processing a return, so unless you have negotiated terms with Stripe you are in the same boat there as you shortly will be with PayPal.

Fjolsvith 8y ago
Actually, you are in a better boat with Stripe. With PayPal, a customer can easily request a full refund without contacting the seller. With Stripe, they have to go to their bank and try to make a case for fraud. I used to have PayPal for my shed business which has an average of $4k for the transaction. A customer would order using PayPal and then call the next day to arrange immediate delivery, despite my store telling them we were backordered. They would get angry when I explained that, and request the refund. We got hit with fees both ways.
- username444 8y ago
  I feel for you. I really do. I've been through this repeatedly. And it's a UI problem that's your job to fix, not the customer's fault. Here are some things you can do: - repeat the backordered message on every page: home page, category page, product page, cart page, checkout page - have them select a delivery date while adding the product - add messaging that the customer is "reserving their unit in priority sequence", not purchasing it - set it out of stock and harvest their email, with the promise to only use it to notify when it's back in stock All of these WILL HURT CONVERSION RATES, but that's the tradeoff for reducing return/refund rates.