I complained to paypal and here's the reply. They say it's not the WHOLE transaction cost that they're keeping, just the 30 cents USD "fixed " part of the cost. That takes care of my concerns on the big ticket items, but I expect it's still going to be problematic for people who sell mountains of smaller stuff. When a refund is issued using the "Issue Refund" link, we credit you back all or partial amount of the variable transaction fee (2.9% of the transaction amount) while the fixed portion of the fee ($0.30 USD per transaction) is not refundable. If a partial refund is processed, then a partial credit of the variable fee is refunded to you. 50% of the transaction is refunded, 50% of the variable fee is returned to you. For example, the fee for a $10.00USD payment would be $0.31USD (variable) and $0.30USD (fixed) totaling $0.61USD in fees. If the full payment was refunded you would receive the $0.31USD varied fee back, not the fixed $0.30USD back. To learn more about variable and fixed transaction fees, click Fees at the bottom of any PayPal page.
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