So Paypal is going ahead with this "supposed" industry standard of keeping all fees from a refund

Shumdit
Contributor
Contributor

As of 11/1/19 Paypal will be keeping the fees on a refund. So if someone buys an item for $1000 and you pay approx $30 in fees but the customer returns the item or even cancels the order before it's shipped you will be out that $30 if I understand this correctly, even if you did NOTHING wrong.  They claim this is industry standard but it certainly is not. What a pitiful money grab and one that will cost them in the long run as people defect from their services. I am no longer going to accept Paypal on my website and will be transitioning to ebay's payment system also even though it may just be a different sort of headache if this is true. I can't allow a company to basically rob me like this. Tell me I am misunderstanding. I can't imagine it will be long before they are challenged in court over this.

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8 REPLIES 8

sharpiemarker
Esteemed Advisor
Esteemed Advisor

@Shumdit 

 

Yes, PayPal is keeping the fees, etc. My thing is, if its the buyer's fault that you're refunding, deduct the fee or split the fee. If you have your own store and use the authorization and capture method, business accounts can delay the capture for 3 days in case buyer changes their mind or sold out item and all you do is cancel the order and the pending authorization expires but with marketplaces, it may not work like that to allow you to accept or deny payment essentially. I guess it depends on how the PayPal checkout is set up by marketplaces and what PayPal account type the seller's have.


Kudos & Solved are greatly appreciated. 🙂
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Shumdit
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That won't work the way many accounts are set up I am afraid. You will end up having to do a "refund" which means you will be on the hook for Paypal's fees unless you can convince the buyer these fees are non-refundable and as a "buyer" I am not going to be receptive to that so I am sure my customer's won't be either. This is just a horrible policy by Paypal and I can't believe they are going to literally have me take the 7 figures/year of transactions and the not insignificant fees that I pay to them as part of that and watch me walk out the door. We will see.

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lrppa1
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I thought that I was upset when Paypal said, "we appreciate you" by removing 2.7% fees for high volume users and making everyone  go to 2.9$. I love all of the small business pictures that paypal shows on their main page and that they "support" us in so many ways.

 

It is odd that they would make this terrible change ahead of eBay's push for their own payments system. Paypal reached out a few months back to see what changes they could make to keep people from leaving and going to ebay's payment system. This would not be one of those changes paypal. I encourage everyone that is an ebay seller to switch over to ebay's payment system when it is available. This, combined with paypal simply never responding to emails, the switch from 2.7% to 2.9% a while back,  is certainly a turning point in the decline of paypal and an opening for other processors to eat their lunch.

 

#byepaypal

 

 

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MMc72
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I guess we will have to pass this additional cost on to our buyers with a restocking fee. That's too bad.

 

My concern is if it's a large purchase, is there any cap to how much they will keep?

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Shumdit
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Contributor

Here is the issue: Customer returns an item that is $1000 and you paid approx $30 in fees for it. The customer knows (after the first time they get dinged with these fees) that they will have a big charge so they simply claim you send them defective goods or the wrong item etc. or they contact their credit card company they used to pay the paypal charge and say they were not given the full refund. You will end up out that $30 as the seller.

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bdeyring
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This is a total money grab and will only serve to push small business further off the map of eCommerce and into the abyss.  Only larger corps who can negotiate favorable terms and absorb this into their overhead / pass along to customers will be able to sustain this.

 

Add to that, this just provides the buyers with just 1 more tool that they can use to extort a discount from their seller.  Looks like I'll just have to increase the price of all my goods by 3% now.

 

Very stupid, PayPal!

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colonyboy
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Ebay's new integrated payment system is coming soon for all who want it. Cheaper rates by over 1% and fee refunds on refunds given by sellers. Paypal hit the greed button with this move and, hop[efully, will pay the price.

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bdeyring
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eBay and PayPal are still completely in bed together - this is just a manipulative move to force users over to the eBay system, which is fraught with its own drawbacks.

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