6 ms·

Upcoming Changes for Some US Businesses

60 points by arbuge 5y ago

liquidify 5y ago
Based on this article, I'm not clear as to what exactly has changed and by how much. I wonder if they intentionally made it difficult to understand what they are doing.
simonsarris 5y ago
Aannoying how hard it is to compare. So for online payments: OLD: 2.90% + $0.30 NEW: 3.49% + $0.49 It seems like some in-store payments might be slightly cheaper, but I don't want to misread anything. It's funny that they benchmark their in-store numbers vs Square, but decline to benchmark anything else. Their "new" online fee is now higher than Stripe, whereas before it was identical (Stripe is 2.9% + $0.30) https://www.paypal.com/us/webapps/mpp/merchant-fees https://www.paypal.com/us/webapps/mpp/merchant-fees The "Why are we making this change?" section never answers the question, of course.
- kerng 5y ago
  I think it's part of a general price increase we have/will shortly see everywhere. Although I'm expecting it in many areas, it's still crazy how steep the rise is.
  - gruez 5y ago
    You mean because of inflation? That wouldn't explain why the % part of the fee is increasing.
    - an_opabinia 5y ago
      Yeah, the poster doesn't know what they're talking about. Also, App Store-like fees have been declining in the last two years.
    - weird-eye-issue 5y ago
      How did you arrive at that conclusion?
      - gruez 5y ago
        The "inflation" bit, or the "percentage shouldn't go" up bit?
        weird-eye-issue 5y ago
        Their costs don't necessarily have to go up linearly. So it isn't a given that they don't need to increase the percent. That would only happen in a perfect world.
    - ceejayoz 5y ago
      The % part is probably rising because of the increase in credit card rewards. 2% cash back on everything, 4-5% on travel and restaurants and groceries… all paid for by increasing interchange fees. The Visa Signature, Visa Infinite, and MasterCard World Elite cards have approached Amex in fees. Fixed-rate processors like PayPal and Stripe are getting squeezed here.
    - bostonsre 5y ago
      Shouldn't inflation cause money to have less buying power which would mean prices increase? If so, PayPal wouldn't need to change their percentage to adjust for inflation.
      - BuyMyBitcoins 5y ago
        Indeed, charging a percent fee on every transaction is inflation proof. I could see the flat rate going up due to inflation but to increase both looks like PayPal is just being greedy.
      - deleted 5y ago
        [deleted]
    - kerng 5y ago
      Everyone will try via various means to get a piece of the multi trillion dollar pie the US is creating.
- tyingq 5y ago
  That's not quite the whole story. The new 3.49% is when you choose "old school pay with Paypal". For online: If you use it like Stripe, to take a credit card payment (where the end user doesn't know you're using Paypal), their rates are lower than Stripe. 2.59%+$0.49 (Paypal) vs 2.9%+$0.30 (Stripe). For in-person, as a "normal" credit card reader: 2.29% + $0.09. Ignoring in-person old school Paypal, as I don't believe anyone really uses that. Though, for in-person, I would guess a regular old merchant account would be a better idea than Paypal, Square, or Stripe. So many transactions are debit cards, which are dirt cheap if you just use a a normal merchant account. Way cheaper than Stripe, Paypal, Square, etc.
  - nickjj 5y ago
    > The new 3.49% is when you choose "old school pay with Paypal". I don't think this is really old school. This is how most folks use PayPal. I accept a decent amount of transactions online and I have about a 50 / 50 split between folks paying with Stripe and PayPal. The people who want to use PayPal are using it with the new 3.49% rates method because this is the one where they enter in their PayPal email address to make a payment. Literally 100% of the PayPal transactions I've accepted over the last 3 years are categorized as "PayPal checkout" which is hit by the new rate moving forward. This is a direct price increase by PayPal for almost everyone accepting payments online through PayPal. From 2.9% + 30c to 3.49% + 49c. It makes them substantially more expensive than Stripe because everyone who pays with PayPal is using their email address not a credit card. It's no longer a no brainer decision to support both on your site back when the rates were the same as Stripe.
    - tyingq 5y ago
      Sure. But, if you're comparing to Stripe I think it's fair to show the fee differences for straight credit card payments.
      - nickjj 5y ago
        > But, if you're comparing to Stripe I think it's fair to show the fee differences for straight credit card payments. The only thing that matters is the bottom line for end customers. They either pay by credit card or PayPal (I know there's Apple Pay and crypto too, but let's ignore those for now). If the customer uses a credit card they don't care if Stripe or PayPal processes it. They just want to enter in their credit card and be done with it. Most businesses will be using Stripe's credit card forms for that because it lets you embed the form into their page so the customer doesn't need to leave. Stripe's API is also a billion times better than PayPal's so I can't imagine anyone will realistically want to use PayPal's API directly to embed a credit / debit form (assuming this is even an option). However when folks want to pay using PayPal, there is only 1 option of using PayPal with their associated email address. There's no escaping this price increase short of dropping all support for PayPal, which is going to be a very big net loss from loss of sales from anyone who doesn't have a credit or debit card. So yes, this is a direct price increase to continue using PayPal and it's unrelated to Stripe also supporting credit cards.
- U8dcN7vx 5y ago
  The newsroom piece says why, it seems to me: "to better align our pricing with the value that our products and services provide.", aka because we want to make more money and we have sufficient leverage.
PaulDavisThe1st 5y ago
Q: Why are we doing this? A: Because we feel like it. Q: Isn't PayPal already a hugely profitable company? A: Sure, but we think we can do better. Q: What about micropayments? A: As usual, we try not to mention our support for them.
- echelon 5y ago
  It may have been because the payment networks increased their fees. But even more probably, they might have been running a substantial percentage of payments at a loss and this change was modeled to mitigate that. Offering these rates for $6 items will lose a lot of money.
  - an_opabinia 5y ago
    Competition from other digital payments, specifically Apple Pay and specifically not Square, has taken low-fraud users out of PayPal, raising their costs. It's ironic that competition in payments lead to PayPal raising its fee though. The industry is zero-sum.
    - user3939382 5y ago
      Hopefully it’s the first step in a death spiral for PayPal, although they have so much momentum it would take a long time if at all. From what I’ve observed over the last 15 years, they have a culture of horrible corporate ethics and deserve to disappear.
      - PaulDavisThe1st 5y ago
        While I'm no big fan of PayPal (I receive 95% of my income via them), it seems relevant to me to quote the entry from the Ardour FAQ about why we use PayPal: ----------- WHY PAYPAL? The Ardour project receives the vast majority of the revenue it generates in the form of small payments (less than US$10, and most of them around US$1). PayPal has a micropayments system that saves us nearly US$0.23 on every US$1 transaction. As far as we know, no other payment company offers this (and to be honest, we worry that PayPal may remove it at any time). This has huge consequences for us in terms of the fees we have to pay, and thus the actual revenue we receive when you do pay. In some jurisdictions PayPal allows people to create subscriptions without having a credit card. This is also something that is not offered by any other subscription-offering service that we are aware of. PayPal also handles the largest number of countries around the world, unlike many newer online credit card-based services that have limited their current offerings to North America and Europe (at best). Since Ardour is used in over 140 countries around the world, this seems respectful of our worldwide base of users/supporters.
mrtweetyhack 5y ago
Paypal is a scam
stadium 5y ago
Venmo currently has no fees for consumers, is this changing too or only businesses are impacted by the change?
- SV_BubbleTime 5y ago
  Venmo will cancel your account at the drop of a hat, faster than parent company PayPal. I wouldn’t recommend anyone trust that system for anything. Both my SO and I were canceled because we separately accepted payments from people out of state. The terms for Venmo are amazingly limited. Find a better option.
resoluteteeth 5y ago
I don't understand the difference between digital payments and credit card payments, but if digital payments are what stores are using, they're all probably going to ditch PayPal now.
Covzire 5y ago
Another monopoly continues to grow unabated.
- gruez 5y ago
  Payment processing is hardly a monopoly. As others have mentioned square and stripe are both viable alternatives.
  - nickjj 5y ago
    Stripe isn't a viable alternative if someone wants to pay using PayPal instead of a credit card. This is especially common for folks who want to make 1 time payments and don't have access to a credit / debit card or simply feel more comfortable using PayPal. PayPal is a monopoly on accepting payments by email addresses associated to a PayPal account. There is no alternative.
    - gruez 5y ago
      Sounds like the straightforward thing to do in that case is offer both options and get the consumer to pay the difference. Also AFAIK google pay and amazon pay offer similar service, but they're much less popular.
      - nickjj 5y ago
        Making the customer pay the difference is tricky because it would mean showing a different checkout price based on the payment method. What will probably happen is businesses will increase their prices across the board for everyone which is a win for the payment provider but a loss for both businesses and customers.
- graeme 5y ago
  Monopoly doesn’t mean “big company I dislike”. It has an actual definition and Paypal doesn’t meet it.
latchkey 5y ago
Interesting the comparison to Strip and Square which must be eating into their business. Anyone who's doing enough volume through these services isn't paying those published rates anyway. This will actually eat more into the smaller shops, who get the highest rates. I wonder how this is affected by the value of the dollar. Things are generally getting more expensive across the board.
PaulDavisThe1st 5y ago
Another interesting question is what this will mean for Braintree rates. They are a wholly-owned subsidiary of PayPal but function like an almost-wholly independent payment system. I wonder if their rates will shift in step.
vgeek 5y ago
I wondered if this was to compensate from eBay's recent push to shift payments to their own system versus Paypal after their split-- but per https://finance.yahoo.com/quote/PYPL/financials https://finance.yahoo.com/quote/PYPL/financials, Paypal's revenue hasn't dipped and they seem to be plenty profitable. Just a cash grab or actual increased fees/risks due to merchant profile?
darig 5y ago
Paypal stole all the money from my legal business 20 years ago, and I will never use them again. They are corrupt and evil. Thieves.
Dah00n 5y ago
You really shouldn't use Paypal. I have used a lot of payment systems etc. and none comes close to the awfulness that is Paypal.
- MikeDelta 5y ago
  Given your experience, which ones would you recommend as alternative?
- analog31 5y ago
  I use a PP merchant account, here's why. I have a side business that makes a little electronic gadget for an obscure hobby. For the most part, my customers are not techies. PP is the only [0] payment processing system that does not require me to maintain my own custom web server, either physically or in the cloud. All of the other services work like this: "Just put this code on your server, to accept payments through our service." But much as I love programming, I don't trust myself to make my own server work with 100% uptime, no surprise fees, or gaping security holes. With PP, I can use a totally static web page for my business, with a "button" that calls PP's server. Or somebody can even just send the money to me with a note about what they're ordering. Some customers get really confused and I can kind of hand hold them through the purchasing process. Perhaps a second benefit is the whole buyer/seller protection racket. I have had zero problems with buyers, but I think the buyer-friendly approach lets people be a little bit more confident about sending their money to some unknown person on the web. The fee is X percent, so I know that I need to sell Y more units to make up for it, but I think the reputation of PP on the buyer side probably generates those sales for me. Of course I've read some of the horror stories on the seller side, but they seem to be mostly related to selling digital or intangible goods (for lack of a better term). Also, I figure that someone who's already selling a digital service has got the whole web server thing figured out. [0] I occasionally go out there and look for an alternative, and if my claim is outdated, I'd love to know.
  - easrng 5y ago
    Stripe has Payment Links now which don't require any sever. https://stripe.com/payments/payment-links https://stripe.com/payments/payment-links
erikrothoff 5y ago
Be a business in Sweden. Charge customers in USD. Paypal charges a fee for the payment. Then they charge a fee for the currency conversion from the customers’ local currency conversion. Then they use the worst conversion rate for withdrawing money from your account to local bank account (like 5% worse than actual rates). You could get around this by withdrawing the USD to a USD account via Transferwise. They changed (fixed) this by charging a 3% withdrawal fee from USD to USD. So just moving 10000 usd of OUR money to OUR bank account costs 300 USD. That’s AFTER the Paypal transaction fee AND after the conversion fee from customer’s local currency to USD. Thank god for competition, at least we can start moving new customers to Stripe. But dear lord, please stop them
lvh 5y ago
I get the rationale for using a separate domain for user-generated content, I sort-of get the rationale for an internal corp domain, but seeing material facts disclosed on paypal-corp.com reminds me how limited URL bars are for teaching people not to fall for phishing.
- bombcar 5y ago
  PayPal-corp.biz would be a bit worse but why couldn’t they just use corp.paypal.com?!
deleted 5y ago
[deleted]

60 points by arbuge 5y ago

Based on this article, I'm not clear as to what exactly has changed and by how much. I wonder if they intentionally made it difficult to understand what they are doing.

simonsarris 5y ago

Aannoying how hard it is to compare. So for online payments: OLD: 2.90% + $0.30 NEW: 3.49% + $0.49 It seems like some in-store payments might be slightly cheaper, but I don't want to misread anything. It's funny that they benchmark their in-store numbers vs Square, but decline to benchmark anything else. Their "new" online fee is now higher than Stripe, whereas before it was identical (Stripe is 2.9% + $0.30) https://www.paypal.com/us/webapps/mpp/merchant-fees https://www.paypal.com/us/webapps/mpp/merchant-fees The "Why are we making this change?" section never answers the question, of course.

kerng 5y ago
I think it's part of a general price increase we have/will shortly see everywhere. Although I'm expecting it in many areas, it's still crazy how steep the rise is.
- gruez 5y ago
  You mean because of inflation? That wouldn't explain why the % part of the fee is increasing.
  - an_opabinia 5y ago
    Yeah, the poster doesn't know what they're talking about. Also, App Store-like fees have been declining in the last two years.
  - weird-eye-issue 5y ago
    How did you arrive at that conclusion?
    - gruez 5y ago
      The "inflation" bit, or the "percentage shouldn't go" up bit?
      - weird-eye-issue 5y ago
        Their costs don't necessarily have to go up linearly. So it isn't a given that they don't need to increase the percent. That would only happen in a perfect world.
  - ceejayoz 5y ago
    The % part is probably rising because of the increase in credit card rewards. 2% cash back on everything, 4-5% on travel and restaurants and groceries… all paid for by increasing interchange fees. The Visa Signature, Visa Infinite, and MasterCard World Elite cards have approached Amex in fees. Fixed-rate processors like PayPal and Stripe are getting squeezed here.
  - bostonsre 5y ago
    Shouldn't inflation cause money to have less buying power which would mean prices increase? If so, PayPal wouldn't need to change their percentage to adjust for inflation.
    - BuyMyBitcoins 5y ago
      Indeed, charging a percent fee on every transaction is inflation proof. I could see the flat rate going up due to inflation but to increase both looks like PayPal is just being greedy.
    - deleted 5y ago
      [deleted]
  - kerng 5y ago
    Everyone will try via various means to get a piece of the multi trillion dollar pie the US is creating.
tyingq 5y ago
That's not quite the whole story. The new 3.49% is when you choose "old school pay with Paypal". For online: If you use it like Stripe, to take a credit card payment (where the end user doesn't know you're using Paypal), their rates are lower than Stripe. 2.59%+$0.49 (Paypal) vs 2.9%+$0.30 (Stripe). For in-person, as a "normal" credit card reader: 2.29% + $0.09. Ignoring in-person old school Paypal, as I don't believe anyone really uses that. Though, for in-person, I would guess a regular old merchant account would be a better idea than Paypal, Square, or Stripe. So many transactions are debit cards, which are dirt cheap if you just use a a normal merchant account. Way cheaper than Stripe, Paypal, Square, etc.
- nickjj 5y ago
  > The new 3.49% is when you choose "old school pay with Paypal". I don't think this is really old school. This is how most folks use PayPal. I accept a decent amount of transactions online and I have about a 50 / 50 split between folks paying with Stripe and PayPal. The people who want to use PayPal are using it with the new 3.49% rates method because this is the one where they enter in their PayPal email address to make a payment. Literally 100% of the PayPal transactions I've accepted over the last 3 years are categorized as "PayPal checkout" which is hit by the new rate moving forward. This is a direct price increase by PayPal for almost everyone accepting payments online through PayPal. From 2.9% + 30c to 3.49% + 49c. It makes them substantially more expensive than Stripe because everyone who pays with PayPal is using their email address not a credit card. It's no longer a no brainer decision to support both on your site back when the rates were the same as Stripe.
  - tyingq 5y ago
    Sure. But, if you're comparing to Stripe I think it's fair to show the fee differences for straight credit card payments.
    - nickjj 5y ago
      > But, if you're comparing to Stripe I think it's fair to show the fee differences for straight credit card payments. The only thing that matters is the bottom line for end customers. They either pay by credit card or PayPal (I know there's Apple Pay and crypto too, but let's ignore those for now). If the customer uses a credit card they don't care if Stripe or PayPal processes it. They just want to enter in their credit card and be done with it. Most businesses will be using Stripe's credit card forms for that because it lets you embed the form into their page so the customer doesn't need to leave. Stripe's API is also a billion times better than PayPal's so I can't imagine anyone will realistically want to use PayPal's API directly to embed a credit / debit form (assuming this is even an option). However when folks want to pay using PayPal, there is only 1 option of using PayPal with their associated email address. There's no escaping this price increase short of dropping all support for PayPal, which is going to be a very big net loss from loss of sales from anyone who doesn't have a credit or debit card. So yes, this is a direct price increase to continue using PayPal and it's unrelated to Stripe also supporting credit cards.
U8dcN7vx 5y ago
The newsroom piece says why, it seems to me: "to better align our pricing with the value that our products and services provide.", aka because we want to make more money and we have sufficient leverage.

PaulDavisThe1st 5y ago

Q: Why are we doing this? A: Because we feel like it. Q: Isn't PayPal already a hugely profitable company? A: Sure, but we think we can do better. Q: What about micropayments? A: As usual, we try not to mention our support for them.

echelon 5y ago
It may have been because the payment networks increased their fees. But even more probably, they might have been running a substantial percentage of payments at a loss and this change was modeled to mitigate that. Offering these rates for $6 items will lose a lot of money.
- an_opabinia 5y ago
  Competition from other digital payments, specifically Apple Pay and specifically not Square, has taken low-fraud users out of PayPal, raising their costs. It's ironic that competition in payments lead to PayPal raising its fee though. The industry is zero-sum.
  - user3939382 5y ago
    Hopefully it’s the first step in a death spiral for PayPal, although they have so much momentum it would take a long time if at all. From what I’ve observed over the last 15 years, they have a culture of horrible corporate ethics and deserve to disappear.
    - PaulDavisThe1st 5y ago
      While I'm no big fan of PayPal (I receive 95% of my income via them), it seems relevant to me to quote the entry from the Ardour FAQ about why we use PayPal: ----------- WHY PAYPAL? The Ardour project receives the vast majority of the revenue it generates in the form of small payments (less than US$10, and most of them around US$1). PayPal has a micropayments system that saves us nearly US$0.23 on every US$1 transaction. As far as we know, no other payment company offers this (and to be honest, we worry that PayPal may remove it at any time). This has huge consequences for us in terms of the fees we have to pay, and thus the actual revenue we receive when you do pay. In some jurisdictions PayPal allows people to create subscriptions without having a credit card. This is also something that is not offered by any other subscription-offering service that we are aware of. PayPal also handles the largest number of countries around the world, unlike many newer online credit card-based services that have limited their current offerings to North America and Europe (at best). Since Ardour is used in over 140 countries around the world, this seems respectful of our worldwide base of users/supporters.

mrtweetyhack 5y ago

Paypal is a scam

stadium 5y ago

Venmo currently has no fees for consumers, is this changing too or only businesses are impacted by the change?

SV_BubbleTime 5y ago
Venmo will cancel your account at the drop of a hat, faster than parent company PayPal. I wouldn’t recommend anyone trust that system for anything. Both my SO and I were canceled because we separately accepted payments from people out of state. The terms for Venmo are amazingly limited. Find a better option.

resoluteteeth 5y ago

I don't understand the difference between digital payments and credit card payments, but if digital payments are what stores are using, they're all probably going to ditch PayPal now.

Covzire 5y ago

Another monopoly continues to grow unabated.

gruez 5y ago
Payment processing is hardly a monopoly. As others have mentioned square and stripe are both viable alternatives.
- nickjj 5y ago
  Stripe isn't a viable alternative if someone wants to pay using PayPal instead of a credit card. This is especially common for folks who want to make 1 time payments and don't have access to a credit / debit card or simply feel more comfortable using PayPal. PayPal is a monopoly on accepting payments by email addresses associated to a PayPal account. There is no alternative.
  - gruez 5y ago
    Sounds like the straightforward thing to do in that case is offer both options and get the consumer to pay the difference. Also AFAIK google pay and amazon pay offer similar service, but they're much less popular.
    - nickjj 5y ago
      Making the customer pay the difference is tricky because it would mean showing a different checkout price based on the payment method. What will probably happen is businesses will increase their prices across the board for everyone which is a win for the payment provider but a loss for both businesses and customers.
graeme 5y ago
Monopoly doesn’t mean “big company I dislike”. It has an actual definition and Paypal doesn’t meet it.

latchkey 5y ago

Interesting the comparison to Strip and Square which must be eating into their business. Anyone who's doing enough volume through these services isn't paying those published rates anyway. This will actually eat more into the smaller shops, who get the highest rates. I wonder how this is affected by the value of the dollar. Things are generally getting more expensive across the board.

PaulDavisThe1st 5y ago

Another interesting question is what this will mean for Braintree rates. They are a wholly-owned subsidiary of PayPal but function like an almost-wholly independent payment system. I wonder if their rates will shift in step.

vgeek 5y ago

I wondered if this was to compensate from eBay's recent push to shift payments to their own system versus Paypal after their split-- but per https://finance.yahoo.com/quote/PYPL/financials https://finance.yahoo.com/quote/PYPL/financials, Paypal's revenue hasn't dipped and they seem to be plenty profitable. Just a cash grab or actual increased fees/risks due to merchant profile?

darig 5y ago

Paypal stole all the money from my legal business 20 years ago, and I will never use them again. They are corrupt and evil. Thieves.

Dah00n 5y ago

You really shouldn't use Paypal. I have used a lot of payment systems etc. and none comes close to the awfulness that is Paypal.

MikeDelta 5y ago
Given your experience, which ones would you recommend as alternative?
analog31 5y ago
I use a PP merchant account, here's why. I have a side business that makes a little electronic gadget for an obscure hobby. For the most part, my customers are not techies. PP is the only [0] payment processing system that does not require me to maintain my own custom web server, either physically or in the cloud. All of the other services work like this: "Just put this code on your server, to accept payments through our service." But much as I love programming, I don't trust myself to make my own server work with 100% uptime, no surprise fees, or gaping security holes. With PP, I can use a totally static web page for my business, with a "button" that calls PP's server. Or somebody can even just send the money to me with a note about what they're ordering. Some customers get really confused and I can kind of hand hold them through the purchasing process. Perhaps a second benefit is the whole buyer/seller protection racket. I have had zero problems with buyers, but I think the buyer-friendly approach lets people be a little bit more confident about sending their money to some unknown person on the web. The fee is X percent, so I know that I need to sell Y more units to make up for it, but I think the reputation of PP on the buyer side probably generates those sales for me. Of course I've read some of the horror stories on the seller side, but they seem to be mostly related to selling digital or intangible goods (for lack of a better term). Also, I figure that someone who's already selling a digital service has got the whole web server thing figured out. [0] I occasionally go out there and look for an alternative, and if my claim is outdated, I'd love to know.
- easrng 5y ago
  Stripe has Payment Links now which don't require any sever. https://stripe.com/payments/payment-links https://stripe.com/payments/payment-links

erikrothoff 5y ago

Be a business in Sweden. Charge customers in USD. Paypal charges a fee for the payment. Then they charge a fee for the currency conversion from the customers’ local currency conversion. Then they use the worst conversion rate for withdrawing money from your account to local bank account (like 5% worse than actual rates). You could get around this by withdrawing the USD to a USD account via Transferwise. They changed (fixed) this by charging a 3% withdrawal fee from USD to USD. So just moving 10000 usd of OUR money to OUR bank account costs 300 USD. That’s AFTER the Paypal transaction fee AND after the conversion fee from customer’s local currency to USD. Thank god for competition, at least we can start moving new customers to Stripe. But dear lord, please stop them

lvh 5y ago

I get the rationale for using a separate domain for user-generated content, I sort-of get the rationale for an internal corp domain, but seeing material facts disclosed on paypal-corp.com reminds me how limited URL bars are for teaching people not to fall for phishing.

bombcar 5y ago
PayPal-corp.biz would be a bit worse but why couldn’t they just use corp.paypal.com?!

deleted 5y ago

[deleted]