PayPal Refund Policy Change - Retaining Commercial Transaction Fees

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Posted 4th Mar 2020
From 5th March 2020, PayPal will no longer return the transaction fees to the seller when a refund is issued.


Updates to the User Agreement


Effective Date: March 5, 2020

2. Fees – Commercial Transaction Refunds

Section A3.4 (Commercial Transaction Refunds) of Schedule 1 (Table of Fees) is amended to clarify that, if you carry out a refund of a Commercial Transaction payment, all of the fees originally paid by you to receive the payment will not be returned to you. Section A3.4 (Commercial Transaction Refunds) of Schedule 1 (Table of Fees) (presented in context with the column headings) now reads as follows (with amendments shown underlined):

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This change does not take effect for users registered with PayPal as residents of Ireland until further immediate notice of the change, to be published by PayPal on the Policy Updates page (accessible via the Legal footer on most PayPal site pages) on or after March 5, 2020(as PayPal may determine in its sole discretion).
Community Updates
Chanchi32's avatar
Chanchi32
Thanks for posting @happyshopper2

Paypal currently charges sellers 2.9% fee + fixed fee (30p). Previously the 2.9% fee was returned in the case of a refund (and the fixed fee retained) however from the 5th March there will be no refund of Paypal fees, similar to what they have adopted in the US in May 2019. This does not apply to users registered with PayPal as residents of Ireland. They have an updated FAQ already on the Paypal site.

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If you are selling items with a high returns rate e.g. clothing then the impact of this change maybe significant, and may actually result in higher prices being charged to factor in the fee policy change.

Link to new agreement
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  1. jamie15's avatar
    jamie15
    bozo00704/03/2020 08:32

    Sellers will now say "buyers have to pay 3% return fees" and then buyers …Sellers will now say "buyers have to pay 3% return fees" and then buyers will find a way to find some fault in the item to blame the seller. I am going to hold off listing anything of value until the dust settles on this one and some options emerge. Until then, it is gumtree and its ilk for me.


    Thankfully eBay managed payments is launching in the UK within the next year. In terms of competition both Stripe and Vibe Pay (not right now but in future) are looking interesting to me.
  2. bozo007's avatar
    bozo007
    Sellers will now say "buyers have to pay 3% return fees" and then buyers will find a way to find some fault in the item to blame the seller. I am going to hold off listing anything of value until the dust settles on this one and some options emerge. Until then, it is gumtree and its ilk for me.
  3. craigyhay's avatar
    craigyhay
    paypal always leading the way in greed.
  4. jamie15's avatar
    jamie15
    Azwipe04/03/2020 09:34

    Seems perfectly reasonable, they are providing a service regardless of if …Seems perfectly reasonable, they are providing a service regardless of if the payment is refunded. No different to the card processing fees for retailers.


    So they keep the 20p to cover the fees, not their % profit. Even if they raised the fixed fee to 40p I would still prefer it to this rubbish.
  5. plewis00's avatar
    plewis00
    Most of the criticism of this policy change is that eBay has made buying online so dumbed down for idiots, it does not take much to enter a wrong address which leads to a refund or someone to realise they can't actually afford it (because there are no repercussions). For everyone claiming that 'uh, it's a cost of business', as eBay captures the payment immediately you have no time to cancel the transaction, it's not as though you get an authorisation window to decide whether to accept it, in which case if you did, you would not lose the fees with any other provider. Many other payment providers also charge a small fee for refunds as they are smart enough to realise you don't make money on a transaction that doesn't go through.

    PayPal have made a number of changes in the last year and all in the name of greed - there is literally no other explanation. It's not like the quality of service has improved, it's got worse. The site doesn't even render properly on smaller devices because it's so cluttered with crap.
  6. Domthedonkey's avatar
    Domthedonkey
    This was a reply from Paypal a few days ago.

    "When a full or partial refund is issued using the Issue a Refund link or Credit via Virtual Terminal, PayPal will retain the fees paid by the customer when they originally received the payment. If you refund a payment for goods or services, there are no additional fees to issue the refund, but the fees you originally paid as the seller are not returned to you."
  7. Azwipe's avatar
    Azwipe
    Seems perfectly reasonable, they are providing a service regardless of if the payment is refunded. No different to the card processing fees for retailers.
  8. jon81uk's avatar
    jon81uk
    If a commercial retailer is using Barclaycard payments to take credit cards, do they get a refund of fees when they refund a transaction? I would guess not.

    Therefore I can't see why PayPal shouldn't charge for a business to business service.

    For non-commercial person to person (such as eBay sales of second hand goods) then I think there should be more goodwill, particularly as refunds should be rare as there is no legal need to refund.
  9. craigyhay's avatar
    craigyhay
    bozo00704/03/2020 12:32

    Yes, how dare they charge fees for a service they have to provide even in …Yes, how dare they charge fees for a service they have to provide even in the case of a refund.Every transaction has a cost, including the cost of compliance. Would you rather they raise the fees but charge nothing for refunds?



    card providers charge a fee to paypal and other merchants to process a payment, this payment is refunded to the merchant if the transaction is, why should paypal charge full fee's where they have not been charged?

    Besides...

    other business's figure in the cost of providing refunds in there original fee's whats so special about paypal?!

    they are just greedy and have a monopoly on areas of the market (edited)
  10. SavvyShopper's avatar
    SavvyShopper Author
    jon81uk04/03/2020 10:07

    For non-commercial person to person (such as eBay sales of second hand …For non-commercial person to person (such as eBay sales of second hand goods) then I think there should be more goodwill, particularly as refunds should be rare as there is no legal need to refund.


    freakstyler04/03/2020 13:31

    I take it this includes ebay payments even if you’re a private seller? I k …I take it this includes ebay payments even if you’re a private seller? I know this has been on the cards for a while over in the states but I assumed this only applied to business sellers?


    I'm quite certain that this applies to all sellers of goods and services. (edited)
  11. SavvyShopper's avatar
    SavvyShopper Author
    19DembaBa1904/03/2020 14:49

    So is this good for buyers or sellers. Let's say I buy from eBay and I …So is this good for buyers or sellers. Let's say I buy from eBay and I return for refund do I have to pay a fee to get my refund back from PayPal


    It's bad for sellers. Nothing's changing for buyers, but as has already been suggested in this thread, it could potentially lead to sellers charging a higher amount for some items. (edited)
  12. freakstyler's avatar
    freakstyler
    SavvyShopper04/03/2020 22:55

    I'm quite certain that this applies to all sellers of goods and services.


    Well another reason not to sell high value items on Ebay then.

    I can see a lot of sellers stopping free returns or leaving the Ebay platform all together because of this, assuming they have their own website. Ebuyer Express springs to mind, they’ve left ebay a couple of times over the last 10 or so years and they already charge more for an item bought on their Ebay store than directly through their site, even when you factor in the cheapest postage option on an item under £50 the website is always cheaper.
  13. jamie15's avatar
    jamie15
    HappyShopper25/04/2020 21:04

    Apparently, they have temporarily suspended the roll-out of this - they …Apparently, they have temporarily suspended the roll-out of this - they sent out emails advising this a few weeks ago.My guess is it is due to the covid pandemic and the potentially negative press this change in policy would get at this point in time.Also, can anyone confirm this policy change applies to all sellers not just business sellers.


    I had not heard anything about this from PayPal but have noticed they haven't changed it when issuing a few refunds. Good to see it is delayed but knowing how greedy PayPal is it won't surprise me if they bring it back. (edited)
  14. jamie15's avatar
    jamie15
    Domthedonkey14/01/2021 12:38

    This was a reply from Paypal a few days ago."When a full or partial refund …This was a reply from Paypal a few days ago."When a full or partial refund is issued using the Issue a Refund link or Credit via Virtual Terminal, PayPal will retain the fees paid by the customer when they originally received the payment. If you refund a payment for goods or services, there are no additional fees to issue the refund, but the fees you originally paid as the seller are not returned to you."


    I issued a refund this week and full fee retained by PayPal, managed payments already in testing in the UK so hopefully rolled out by the end of the year as eBay don't do this (yet)!
  15. jamie15's avatar
    jamie15
    bozo00704/03/2020 08:32

    Sellers will now say "buyers have to pay 3% return fees" and then buyers …Sellers will now say "buyers have to pay 3% return fees" and then buyers will find a way to find some fault in the item to blame the seller. I am going to hold off listing anything of value until the dust settles on this one and some options emerge. Until then, it is gumtree and its ilk for me.


    Sellers not allowed to charge restocking fees or anything like that, and as you have said buyers would lie to avoid the fee anyway.
  16. bozo007's avatar
    bozo007
    craigyhay04/03/2020 08:48

    paypal always leading the way in greed.


    Yes, how dare they charge fees for a service they have to provide even in the case of a refund.

    Every transaction has a cost, including the cost of compliance. Would you rather they raise the fees but charge nothing for refunds?
  17. SUMMONER's avatar
    SUMMONER
    bozo00704/03/2020 12:32

    Yes, how dare they charge fees for a service they have to provide even in …Yes, how dare they charge fees for a service they have to provide even in the case of a refund.Every transaction has a cost, including the cost of compliance. Would you rather they raise the fees but charge nothing for refunds?


    Until now Paypal only kept the 30p processing fee, which is in line with what other card processors do, but now they want to also keep the up to 2.9% as well.

    Cancelled orders are going to be very very painful for businesses accepting Paypal. (edited)
  18. bozo007's avatar
    bozo007
    SUMMONER04/03/2020 13:21

    Until now Paypal only kept the 30p processing fee, which is in line with …Until now Paypal only kept the 30p processing fee, which is in line with what other card processors do, but now they want to also keep the up to 2.9% as well.Cancelled orders are going to be very very painful for businesses accepting Paypal.


    I agree and businesses will respond by raising prices.
  19. freakstyler's avatar
    freakstyler
    I take it this includes ebay payments even if you’re a private seller? I know this has been on the cards for a while over in the states but I assumed this only applied to business sellers?
  20. 19DembaBa19's avatar
    19DembaBa19
    So is this good for buyers or sellers. Let's say I buy from eBay and I return for refund do I have to pay a fee to get my refund back from PayPal
  21. niconelove's avatar
    niconelove
    The sooner ebay start their own
    Payment system the better, i hear its starting soon
  22. jamie15's avatar
    jamie15
    niconelove05/03/2020 20:21

    The sooner ebay start their own Payment system the better, i hear its …The sooner ebay start their own Payment system the better, i hear its starting soon


    Think it will be next year before it comes to the UK.
  23. jon81uk's avatar
    jon81uk
    freakstyler05/03/2020 00:17

    Well another reason not to sell high value items on Ebay then.I can see a …Well another reason not to sell high value items on Ebay then.I can see a lot of sellers stopping free returns or leaving the Ebay platform all together because of this, assuming they have their own website. Ebuyer Express springs to mind, they’ve left ebay a couple of times over the last 10 or so years and they already charge more for an item bought on their Ebay store than directly through their site, even when you factor in the cheapest postage option on an item under £50 the website is always cheaper.



    Business sellers still need to give a refund for a return by law, but the postage back to them doesn't need to be prepaid.
  24. leeuk321's avatar
    leeuk321
    It's past the 5th March now, has any seller had this happen on their PayPal account yet (i.e. PayPal keep all their fees for a refund, rather than just keeping the fixed 20/30p fee)? I had a transaction paid on 9th Mar and refunded on 13th Mar - both after the 5th Mar date - and still just the 30p fixed-fee difference. I just looked through my emails, my PayPal summary, my PayPal inbox, the PayPal terms and conditions, and spoke to a PayPal advisor, and after one hour still couldn't deduce if/when it would happen to my account. (edited)
  25. pantheruncia's avatar
    pantheruncia
    I too will be hesitant upon selling higher value items. it was only a few months ago i sold a watch for £2000 and got charged a heft £60ish fee. The buyer said he had clicked on it by accident and requested a cancelation.
    I refunded him and the fee went back to.
    I guess now i would just have lost £60 and still not sold my watch.
    I am not a gambler so i will stay well away for now.
  26. dodgymix's avatar
    dodgymix
    Basically if your'e a personal seller on ebay, dont accept returns

    I state clearly in my listing i don't accept returns unless my fault (wrong item send or faulty)

    I refuse any requests for returns and occasionally get negative feedback as a result.. part of parcel of dealing with general public
  27. dodgymix's avatar
    dodgymix
    pantheruncia16/03/2020 08:52

    I too will be hesitant upon selling higher value items. it was only a few …I too will be hesitant upon selling higher value items. it was only a few months ago i sold a watch for £2000 and got charged a heft £60ish fee. The buyer said he had clicked on it by accident and requested a cancelation.I refunded him and the fee went back to.I guess now i would just have lost £60 and still not sold my watch.I am not a gambler so i will stay well away for now.


    if he hadnt paid with paypal and wanted it cancelled you wouldnt lose money.. its only if theyve paid via paypal and then you have to refund them
  28. pantheruncia's avatar
    pantheruncia
    99% of ebay payments are paypal. 100% for myself
  29. HappyShopper's avatar
    HappyShopper
    Apparently, they have temporarily suspended the roll-out of this - they sent out emails advising this a few weeks ago.

    My guess is it is due to the covid pandemic and the potentially negative press this change in policy would get at this point in time.

    Also, can anyone confirm this policy change applies to all sellers not just business sellers.
  30. HappyShopper's avatar
    HappyShopper
    jamie1525/04/2020 22:41

    I had not heard anything about this from PayPal but have noticed they …I had not heard anything about this from PayPal but have noticed they haven't changed it when issuing a few refunds. Good to see it is delayed but knowing how greedy PayPal is it won't surprise me if they bring it back.


    Oh, it will definitely be rolled out - just a matter of when.

    They did a similar thing in the US: theverge.com/201…rsy

    Looking at the timeline from that article, it matches the current timeline bar the year so perhaps they will wait till September.
  31. jamie15's avatar
    jamie15
    HappyShopper25/04/2020 22:56

    Oh, it will definitely be rolled out - just a matter of when.They did a …Oh, it will definitely be rolled out - just a matter of when.They did a similar thing in the US: https://www.theverge.com/2019/9/20/20876570/paypal-refund-fee-policy-change-sellers-controversyLooking at the timeline from that article, it matches the current timeline bar the year so perhaps they will wait till September.


    Yeah I'm aware about the US changes.

    Managed payments on eBay is rolling out in the UK this year at least.
  32. billythepet's avatar
    billythepet
    Has this been rolled out to the UK yet?
  33. SavvyShopper's avatar
    SavvyShopper Author
    billythepet14/11/2020 19:11

    Has this been rolled out to the UK yet?


    I’m not sure. Haven’t personally been in a position to find out yet. I’ve seen some comments saying that it has and some that it hasn’t.
  34. Potting.Machine's avatar
    Potting.Machine
    I refunded Ebay buyer a full refund on an alleged faulty PC, ended up losing the £35 shipping charge, £20 in petrol and time to collect return, £24 in Paypal fees I lost, got back the item, after receiving the RMA report from my supplier the buyer had liquid damaged the motherboard, so they rejected the return, that cost £113.
    All in, I lost just under £200
  35. andygreyrider's avatar
    andygreyrider
    In the early 2000's, I had a successful eBay account but got swindled that many times by unscrupulous buyers, PayPal froze my account of £44,000.
    I had proof of postage but PayPal still refunded them and the buyer's kept the goods. I am talking about really expensive motorcycle parts.
    I closed down my eBay account, had to pay for lawyers to get PayPal to release my funds and just didn't buy anything on eBay for 16 years.
    Every man and his dog uses PayPal. The seller's have missed out on sure sales from me. It's just laziness really until it goes tits up.
    I use Amazon for everything but have to have a PO Box for delivery.
    I haven't sold anything either.
    I have just started using eBay again because of their new payment system that, doesn't involve PayPal but I will never use PayPal again.
    I have some great products I sell in-person but sales nowhere near before.
    I steer clear of social media and their marketplaces too.
  36. Feargal's avatar
    Feargal
    Had no idea paypal had stopped this, shame as getting postage refunded was a great benefit of paying via paypal
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