Paypal Fees for Refunds

Hobi1202
Contributor
Contributor

According to the new Paypal user agreement effective May 7th, paypal will no longer credit you back the fees when a customer gets full refund or even cancels an eBay order before the item is shipped.  

 

Does anyone have any suggestions on how to handle this financially?  I sell for a business and this is going to throw or net deposits off on a regular basis.

 

 

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104 REPLIES 104

reinhardtdepot
New Community Member

My wife and I are using Paypal in USA for over 10 years. Our combined Paypal accounts earn $400,000+ in sales annually, and we pay monthly for Payflow Pro. This new policy as of May 7th, 2019 where as Paypal will still take all fees (even if we refund an order 100%) - this is setting our business up for great financial losses!

For example, our payflow settings were to "review" and NOT auto accept orders over $500 that were "unusual." Today, Paypal approved order for almost $800 without using the review flag that I had set! My third party fraud filter Subuno flagged it as fraud (as the order was placed in Ohio and being Shipped to New York - over night shipping).

Now, if Paypal still takes fees on this fruad refund, we loose $24+ dollars and we are in the negative for this one order. This fraudulent person can do this over and over everyday until we go bankrupt (knowing that paypal payflow rules won't even work properly) this is very scary, misleading and irritating!

To be honest, I would RATHER Paypal charge us to 4-5% plus $0.30 for a good sale and return all fees on refunds. I would be OKAY with paying extra for processing knowing that I can cancel fraud or customer cancellation requests without having to worry about paying fees for orders that I didn't even keep the money for. If Paypal does implement this, and DOES NOT return transaction fees on refunds, we will have no choice but to take our annual business of $400K to Square.

Perhaps Paypal should allow customers to choose a billing subscription fee type: (i.e. 4-5% with NO fees taken on refunds ... OR a different plan with 2.9% but non-refundable fees on refunds). I hope someone at Paypal forwards this post to a supervisor. Please submit this as both a complaint AND a suggestion. We are very upset and nervous about this new policy as fraudulent competitors can drive each other out of business! 

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peakfitness23
Contributor
Contributor

i agree it is absolutely disguising how paypal do this but its just another case where the sellers get **bleep** and the buyers can just do what ever they want

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ironbridgegolf
Contributor
Contributor

I sell through ebay and have recently noted this change in terms and conditions. I will now look at phasing out the use of paypal for my transactions as customers are changing their mind on an order after payment and i get to foot the bill.  Brilliant con for businesses

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SOEKS1
Contributor
Contributor

According to the June 6 2019 update, if a merchant refunds a customer's purchase, PayPal will no longer refund the fees taken for that transaction. This seems rather unreasonable but just in case I have misunderstood the situation, I would like to suggest a test case:

A customer places an order for an item but has inadvertently selected the wrong item. He still wishes to make a purchase but the item he wants costs less than the item he ordered in error. In order to avoid raising credits and issuing a partial refund, the simplest method is to refund his original purchase and let him place an order for the correct item. Am I to understand that if I do that, I will now be penalized by PayPal by having to absorb transaction fees for a sum never physically received?

I'm sorry if I worded that a little harshly but those fees will only add to the burden of an ever-lower bottom line.

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lola1122
New Community Member

I think it's ridiculous that we, as the people who essentially keep company's like Paypal (etal) running, have to spend countless and frustrating hours TRYING to get help from the 'Institutes' when we have been scammed or duped out of our money!  Especially when online shopping is becoming the preferred way of shopping and we have NO CHOICE but to PREPAY for an order and, TRUST the seller to be HONORABLE...!

Then, adding to THAT gamble … we feel it necessary to APOLOGIZE for any "harsh language" we express when expressing our CONCERNS and COMPLAINTS! PayPal is indeed, in need of an upgrade to be PROTECTIVE of their Company AND their Customers …!  Get on a Pride Parade, PayPal!

I applaud you SOEKS1 and hope you actually got a satisfactory resolve? 

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RSinclair3
Contributor
Contributor

However, I am pleased that Paypal did not hide this information in the fine print, and made an effort to let us all know this beforehand.

 

I will, therefore, do my best to NOT USE PAYPAL for payments, to avoid any such unreasonable charges.  It is hard enough, as we all know, to obtain a Paypal refund (there are so many exceptions) -- and then to go further and not refund the transaction fee -- well Greed will have its reward at some point.  One of these days Paypal will find itself in a situation when itself will be penalized -- and I hope that penalty will be as harsh as this new rule.

 

 

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

@RSinclair3 

 

You're late with the outrage.

 

If the refund is not due to a mistake on your part, deduct it from the amount you're refunding. It's not against the PayPal TOS as far as I know.

 

So, say you're paid $5.00 and you're refunding $5.00, deduct the amount of the PayPal fee from $5.00 and put that amount as the refund amount.


Kudos & Solved are greatly appreciated. 🙂
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SOEKS1
Contributor
Contributor

@sharpiemarker wrote:

If the refund is not due to a mistake on your part, deduct it from the amount you're refunding. It's not against the PayPal TOS as far as I know.


Ludicrous suggestion. That has to be one of the best methods for losing a potential or existing customer!

Example:
At the top of our order page, we have a warning that all prices on the page apply to purchases made within Metropolitan France only. This has a flashing warning sign and a link to our contact page stating that they should contact us for shipping costs to their particular country. Nonetheless, at least 3 people each week still place an order via that page for delivery to another country. Our response is to instantly refund the purchase providing an explanation and a quote for shipping to their country. They can then choose to accept the quote, in which case we send them a PayPal invoice manually, or they may change their mind about buying. If we were to charge them PayPal's 2.9% fee for their error, do you honestly believe we would ever see them again? And what would they be saying about our company behind our backs? Remember, good news travels slowly but bad news spreads like wildfire! Evidently, PayPal gave that last phrase little consideration when they decided to implement this new policy.

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archtops
Contributor
Contributor

Agreed. We've long been pleased to recommend Paypal to our customers, over the card processors, precisely because they *did* refund the purchase price in full, including their fees. Now they are no better than VISA, MC AMEX etc. 

 

And with an estimated 30% or more online purchases returned:

 

https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/

 

they are making out like bandits, at the expense of their customers, and their merchants.

 

We urge PayPal to retain their previous customer friendly return policy asap.

 

-JV

archtop.com

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

@archtops 

 

Now it's a matter of comparing whose fees are lower and go with that. Or try other best practices to lower chances of returns, better/clearer item descriptions, better packed to reduce in-transit damage or change the type of item you're selling all together that has less, rare or no chance of being returned.


Kudos & Solved are greatly appreciated. 🙂
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