PayPal is making a small change to its User Agreement that could prove quite costly to sellers. According to the PayPal notice, PayPal will no longer credit fees for refunds for returns or other reasons. Currently PayPal charges a fee of 2.90% + $0.30 for every transaction. If you do a refund, then you get back that 2.90% and PayPal keeps the $0.30. Now it will start keeping the whole processing fee that you paid.

Here’s what the notice says:

“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.”

The new fee rules go into effect on May 7, 2019.

There’s also the following changes being made:

“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.”

Guru’s Wrap-up

That’s a huge change and could be a bug headache especially for sellers who sell high priced items. If you sell something for $1,000, you will soon be out of $29.30 in case of a refund, instead of just $0.30 with the current rule. PayPal will keep almost 3% on your money, even if the refund is immediately processed.

HT: DoC