PayPal starts charging 2.9% for refunded sales
techspot.com
techspot.com
And this is why we cannot have monopolies.
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).
They’ve been nickel and diming sellers forever, and it seems it’s finally catching up to them.
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.
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.
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).
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).
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.
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.
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.
To put some sense of magnitude on it, according to 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?
Also there are big players in the market that don't support PayPal at all, e.g. Amazon.
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.
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.
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.
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).
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.
It may be greed and lack of sight from PayPal side, but capitalism tends to adjust itself.
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.