PayPal Stiffs Sellers With Changes in Refund Policy

PayPal have announced some changes that will affect their US customers, although we can also expect them to roll this out on a global basis shortly after.

Here are their announced changes. It goes without saying that sellers are livid about the latest changes, as they will start incurring significantly more fees.

• We’re removing the flat rate pricing for sending money to friends and family members who have PayPal accounts in a country other than the United States and introducing a new variable fee of 5% based on the amount you send with a minimum of $0.99 and a maximum of $4.99 per transaction. We’re also removing any variation depending on the recipient’s country. 
• We are changing the currency conversion spread to 3.25% over a base exchange rate in situations where you are a sender of money in a PayPal transaction.
• We’re changing how we treat refunds. If you refund (partially or fully) a transaction to a buyer or a donation to a donor, there are no fees to make the refund, but the fees you originally paid as the seller will not be returned to you.

As you will have noticed, the biggest issue is that when someone requests a refund (which in some businesses happens quite frequently) you, as a seller, will not be refunded the PayPal transaction fee. This is a hard hit for sellers and there are various petitions asking PayPal to reconsider.

Of course, PayPal will totally ignore those requests and go ahead with the changes. The company does not really care what its users think as the bottom line is it still has no serious competition. It’s a maddening situation but PayPal users ultimately have to bear whatever PayPal decides to implement.