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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 mark

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.
- starbugs 7y 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 7y 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 7y 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 7y ago
  Chargeback fees are apples and transaction fees not being refunded are oranges.
tssva 7y 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.

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.

starbugs 7y 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 7y 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 7y 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 7y ago
Chargeback fees are apples and transaction fees not being refunded are oranges.

tssva 7y 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.