Undisclosed Fee Charged to Recipient on Cash Payment

[psberg]

On Sunday ,I submitted a very large payment from my bank account (linked to Paypal) to my housesiiter's Paypal account..  This was a refund of a deposit she had given me.  We were in the room together and looked through the Paypal options and chose "Personal" and probably payment for services (I say "probably" because I am not 100% sure, but I know I didn't click "Gift" or "Other").  The screen info clearly stated the amount I was sending.  There was no fee listed.  I also received an email after I submitted the payment which also stated that payment was being made to the recipient for the same amount.  Nothing was said about a fee. 

We were both surprised to find out today that Paypal had taken a $127 chunk out of this payment!  She asked me what to do, so I called Paypal and was told that she should REJECT the payment..  (I am not sure how that is done since I don't know what her Paypal screen looks like).  I was told that no fees would be charged to sender or recipient if she rejects the payment.  However, I forgot to confirmm whether I would end up with 100% of the money I sent--i.e., whether Paypal would refund all its fees.  Can someone confirm this?  Also,  how long will it take before the money shows up in my bank account?

I am very upset that Paypal did not disclose that while I (the sender) would pay zero fees, that the recipient would be hit with a 3% charge.  I double checked the page on sending cash and there is absolutely no disclosure on this.

For what it's worth, I asked the Paypal phone rep whether using the "Personal"and "gift"  payment option could avoid fees, and was told "no", that fees would always be assessed. 

I have decided to wire her the money instead.  It is faster, and at least I know 100% of the money will go through.

[sandypurins]

The Personal "send money" option has the following choices...

• Gift
• Payment owed
• Cash Advance
• Living expense
• Other

The Purchase "send money" option has the following choices...

• Goods    
• Services
• eBay Items

The Personal "send money" option has a "fee" section on the review payment screen.  The Purchase "send money" option does NOT have a "fee" section on the review payment screen.

Based on what you have posted, you sent a "Purchase - Services" payment... that is why the recipient was charged a fee.  PayPal does not charge a fee for domestic Personal payments sent in US Dollars when you use your PayPal balance or bank account as the exclusive funding source.

If your house sitter rejects or refunds the payment, you will receive a full refund.  The refund will be credited to your PayPal account.  You will need to login to your PayPal account and initiate a "Withdraw" transaction to send the money back to your bank account.

~Sandy

[psberg]

Hi, Sandy,

I responded to your post before I re-read it.  In terms of how the transaction was entered, I did NOT enter it as a purchase.  Rather, it was entered as a personal payment, "payment owed."  This was technically not correct because I was merely returning a deposit, but I thought it would make no difference because it was a personal "send money" entirely from my bank account.

Does this information change your answer?

[PayPal_Adrian]

Welcome to the boards!

I'm sorry to hear there was an unexpected charge - the amount you quote would indicate this was sent as a Purchase payment, and not as Personal.  Had it been sent as a Personal payment, and it was funded entirely by either your balance or bank account (assuming this is a domestic payment), no fees would have been assessed. 

If a fee is going to be assessed on a Personal payment because a card is being used, PayPal notifies the sender at the time of the payment being sent that a fee will be assessed.  It will allow you the option to pay the fee on behalf of the recipient or pass the fee along to them.

If the recipient refunds the payment in full, they are given a full refund of the associated percentage portion of the fee.  The fixed portion of the fee - thirty cents - remains due from the recipient to help mitigate the cost of both the original transfer and the refund itself. However, you would receive the full amount back.

If this transaction was funded with your bank account, it will post into your PayPal balance once the processing is completed.  From there, you will be able to withdraw it back to your bank account or maintain it in your PayPal balance for future purchases. 

One thing I would mention about wiring money - in not all instances will the recipient receive the entire wire transfer.  It has to do with how wire transfers are processed.  This article explains the differences and why.

Thanks!

Adrian

[psberg]

Dear Sandypurins and Adrian,

Thank you both for your informative responses.

You would not believe the run around I received from Paypal when I called about this.  One phone rep said all the recipient had to do was to press the "refund" button.  When I conveyed this information to the recipient, she said it looked like she was stuck, and proceeded to transfer the funds from  her Paypal account to her bank account  (i.e., she may have overlooked any "refund" button).  I contacted a second rep the next day and was told there was no refund option for a personal transfer.  I had to go to a supervisor, who said the recipient could initiate a full refund (all fees returned, but with a charge for the 30 cent transfer).  It now turns out that she in fact does have a "refund" button.

However, the supervisor also told me that in order for Paypal to issue a full refund (including the return of fees), the recipient had to send the funds from her Paypal account (i.e., not from her bank account).  Is this correct?  The recipient called Paypal today and apparently was told that she could just press the "refund" button (which she found this time) and that the full refund would be issued by Paypal from her bank account.

Obviously, if she had to move the funds to her Paypal account from her bank account, it would take several days.

Also, how long does it take before the refund shows up in my Paypal account?

[PayPal_Adrian]

Sandy - sorry, looks like you and I were typing at the same time.  Didn't mean to post over you.    Good to see you though, hope your holidays are going well!

PSberg - Sandy's correct; if the recipient was charged a fee, and if it was both a US-US transaction and you didn't use a card, whatever option was truly selected was not a Personal payment.

In terms of the refund, how it would all work would depend on a few factors. 

First, if the other party still had all the funds in their account that they received, and they issued a refund, PayPal would just return the money right then and there. We would add the fees that were charged back into the balance, then send the full amount back over to you.  It would arrive instantly.

Second, If the account holder had withdrawn the funds, then they would need to use a bank transfer to cover the full amount of the refund (again, minus the fees, which would be waived).  You would see a pending refund in your PayPal account as the bank transfer is processed, which can take 3-5 business days before it credits to your PayPal balance.

Once the refund is in your balance, you could then withdraw the funds.

Thanks!

Adrian