posted on October 23, 2000 07:08:50 PM
I can't understand two silly arguments that I keep seeing here.
1) Paypal fees are just a "cost of doing business" and should not be passed on to the customer.
Buying the item is a "cost." So is shipping the item. So is the listing fee and the FVF. So should we pass these on to the client or should the seller eat these? If I buy an item for $100, should I sell it for $110, and pay all the fees and shipping myself? The bottom line is that all costs of doing business are passed on to the customer or you don't stay in business. Or we can argune that the 1.9% is Paypal's cost of doing business and shouldnt be passed on to us, the "customers."
2) Just mark everything up by 2%. You can't charge customers for using Paypal.
Why not? Don't you charge higher shipping fees if the customer wants it next day or lives in another country? Or do you just price the item as if you were shipping it express to China and make everybody pay for it? Bad business is making everyone pay for what a few customers might insist on. Good business is telling them they can save money using other services and only making them pay for special requests they make.
My goal is to get my customers off of Paypal. My best methods are the 2% they save by using other services and the $10 they get for joining Exchangepath (while it lasts).
By the way, I have no problem with a 2% fee if there was a reason for it. If paypal offered real protection, it would be worth it. But it seems they offer "anti-protection," where they have become the most unsafe service on the net, due to their heavy-handed locking of accounts and lack of customer service. At this point, I would be recommending other services even if PP were free. I keep hoping things will improve. Judging from the way they keep getting worse instead of better, I don't see much hope for that. http://www.ygoodman.com [email protected]
posted on October 23, 2000 07:14:35 PMKateArtist - "The standard fee for using an atm for a merchant I believe is nothing. PayPal charges 1.9 percent for bank and PayPal balance transferrals. PayPal's credit card fees are outrageous when you add in those charges"
Not the case at all. By "ATM" I assume you mean "Debit" card -- a "Debit" card transaction is handled just like a credit card transaction on the Merchant's end - costs us exactly the same as a credit card transaction. This is a common misconception. The banks don't do anything for free!!!
posted on October 23, 2000 07:21:32 PMyisgood I don't consider these "silly" arguments -- at least they're not "silly" to a person who does business out of a real storefront. Prior to PayPal, there was absolutely no situation in which a merchant could legally charge a customer extra when the customer paid with a credit card. It is in all contracts with the processing companies and if you're caught doing it, you can lose your credit card privileges.
Currently, the situation with PayPal et al. is the only one wherein the merchant can pass along the cost of processing a credit card to the customer. I doubt that this loophole will exist for very long.
posted on October 24, 2000 05:07:48 AMCurrently, the situation with PayPal et al. is the only one wherein the merchant can pass along the cost of processing a credit card to the customer. I doubt that this loophole will exist for very long.
This is not a loophole. A merchant cannot charge a credit card customer extra for a credit card transaction. We all agree on this.
But... A seller who accepts PayPal isn't the "merchant" in merchant account terms. The seller is in no way accepting payment via credit card. PayPal is. They have the merchant account. They place the charge on the buyer's credit card. If there is a chargeback, they are the ones who eat it, unless they can confiscate the funds back from the seller.
The seller's name NEVER shows up on a customer's credit card statement. PayPal's does (Confinity). Why? Because PayPal is the merchant who charges the transaction to the customer's card.
The seller accepts a cash payment (on-line) from PayPal. PayPal provides a service to the seller and charges the seller 1.9% for the service if the seller has upgraded to a business/premier account. PayPal is not charging the seller a fee for the credit card processing (technically). They are charging the seller a fee for the service of accepting electronic payment on the seller's behalf. This is why PayPal can (in their mind, not mine) get away with charging for transfers from bank accounts and existing PayPal balances in addition to charging for payments from a credit card.
If PayPal charged the 1.9% for transfers from a credit card only, they would be in violation of their merchant account agreement (again, because PayPal is the "merchant" ). By charging for all transactions, they cannot be held in violation of the merchant account agreement.
[ edited by abingdoncomputers on Oct 24, 2000 05:10 AM ]
posted on October 24, 2000 05:10:17 AMIt is in all contracts with the processing companies and if you're caught doing it, you can lose your credit card privileges.
A seller who accepts PayPal does not have a contract with a processing company (called a merchant account). Paypal does. Please see my last post if this is unclear...
posted on October 24, 2000 05:56:16 AM
Charge extra for PayPal, don't charge extra, it doesn't matter. The point is:
Last Christmas season most sellers had a wonderful time. Lots of sales. Lots of money. Lots of fun.
Last Christmas season there was no PayPal.
You don't have to use it or offer it. We all did just fine before they came along, and if they went out of business today we would still continue to do well.
Remove it as an option from your TOS and from your EOA notice and the requests and usage will drop. Before you know it, your account will become dormant. Leave it open for those few that insist. You will find that your PayPal fees in relation to your "total" sale will be insignificant.
If you would like to battle PayPal on the matter of principle, (ie: constant lies and mis-information) do it here, where your customers can't see your involvement.
posted on October 24, 2000 08:17:37 AMabingdoncomputers In essence then, Pay Pal is the agent for the transaction. I (in my own stubborn way), still think that the fees can not be transferred to the end buyer. Maybe when the dust settles someone will figure it all out. I am sure though that use-fees can not be added on with regards to regular charge card transactions. To those that want to charge their customers go ahead. It's a write off to brick and mortars either way.
Also, Pay Pal is the merchant with regards to that portion of the transaction. What of tax liabilites related to the transaction, if they are the merchant? Or, are they only responsible for the sales of money? A good Treasury Dept. or Banking regulator question.
[ edited by Empires on Oct 24, 2000 08:20 AM ]
posted on October 24, 2000 08:35:47 AM
OK- let's try this again...
Item sells for $10.00, shipping included- buyer has two options: Mail a check or pay through PayPal.
Check through mail:
EOA notice goes out Monday night. Bidder reads and responds on Tuesday night, puts check in the mail ($10.00 + $0.33 for stamp, I'll throw in the envelope and check for free = $10.33) on Wednesday. Four days for delivery to seller makes it Sunday (oops, no mail delivery), seller receives payment on Monday, deposits on Tuesday. 10 day hold on shipping (some sellers do), item shipped a week from Friday. Four days to buyer, item arrives on Tuesday. Total time from EOA to item delivery- 22 days (+/-). Seller also has over two weeks to package item.
Pay through PayPal:
EOA notice goes out Monday night. Bidder reads and responds on Tuesday night, sends PayPal payment ($10.00 + $0.25 electronic transfer of funds fee = $10.25) that night. Seller receives "You've got cash" email Wednesday morning, packages item and mails Wednesday afternoon (buyers expect immediate shipping when using PayPal). Four days for delivery to buyer makes it Sunday (oops, no mail delivery), buyer receives item on Monday. Total time from EOA to item delivery- 7 days (+/-).
Conclusion: Buyer gets item two weeks faster and it costs him less even paying the ETF fee using PayPal than if he had mailed his payment. Seller has to rush to package items for immediate shipping, rather than have a week or two to get it done, as when receiving payment through the mail. And buyers somehow feel that the seller is cheating them for charging the ETF fee. Just who is trying to get something for nothing in this scenario?
The real problem, as I see it, is that many buyers believed PayPal's claim of "Always Free" for buyers would insulate them from what sellers have recently experienced, and they are just now coming to the realization that PayPal's retreat from the "Always Free" claim they made to sellers is going to have an affect on them, after all. And they are not happy.
posted on October 24, 2000 08:38:23 AM
"VARGAS- What buck was spent?"
Those PayPal fees you will write off.
Assuming a 28% tax bracket (and NOT taking state income taxes into account), you'll reduce your federal tax liability by 28 cents for every dollar you pay in fees.
And if you're just cleaning out your attic and not making a profit, you can't write it off at all.
PayPal really had an opportunity to do something DIFFERENT. But it chose to take the traditional path of every CC service out there. It would have been better off splitting fees (charge each side in a transaction a set amount), rather than follow the traditional model.
But Musk was afraid that might run off the bulk of PayPal's account holders.
posted on October 24, 2000 08:45:17 AM
Come on buyers, step up to the plate... anybody?
When you pay for an auction by check or money order, you are responsible for the cost of geting the payment to the seller. Why do you feel that, by using an online payment service, this cost should be shifted to the seller?
posted on October 24, 2000 10:06:29 AM
I'll step up to the plate. When I use my credit card to make purchases, I do not expect an added fee. I don't care if it is paypal or the seller who is accepting the credit card. I don't go to a restaurant and have a fee added, or any other shopping with a credit card, whether on- or off-line.
And why should a buyer pay for the seller's convenience of instant payment. The seller does not have to wait, does not have to think about bounced checks, does not have to send payment reminders.
Seems simple, a seller either does or does not accept credit cards. It is up to the buyer to decide to use the credit card. I would think that anything that makes it easier to recieve your money would be a good thing.
posted on October 24, 2000 10:16:37 AMWhen I use my credit card to make purchases, I do not expect an added fee.
And PayPal, as the merchant in this transaction, does not charge you a fee. From PayPal's Terms of Use:
X.com fully stands behind all credit card transactions by accepting disputes customers lodge with their issuing bank. The consumer is fully protected and as the merchant of record we accept final responsibility for all card transactions.
bold added...
Seems simple, a seller either does or does not accept credit cards.
A seller taking payment through PayPal does not take credit cards. Or are you suggesting that, by purchasing a money order to pay for an auction with a twenty dollar bill, the seller is accepting cash?
posted on October 24, 2000 10:28:32 AM
A seller, by accepting paypal, is accepting a credit card purchase from me. The seller is fully aware that I may pay with a credit card or by transferring funds already in a paypal account. This is not implied, it is part of the paypal process.
If a seller does not want the convenience of Paypal, don't use it.
I just know that I'll bid quicker on an auction that makes it easiest and most convenient for me. But it's the seller wanting my money in the quickest, most convenient way. I'm supposed to pay extra for that privilege?
posted on October 24, 2000 10:39:47 AM
I didn't offer paypal or billpoint for my convenience....I offered it for the buyer's convenience.
I am perfectly happy to go back to checks and MO only, but many buyers don't want the hassle of getting MO or don't want to mail a check. Paypal is for the buyer's convenience.
posted on October 24, 2000 10:43:30 AMAnd why should a buyer pay for the seller's convenience of instant payment.
While it is a convenience to the seller, it is more of a convenience to the buyer. The seller gets his money faster and the buyer gets his merchandise faster. But, the buyer also doesn't have to address an envelope, use a 33c stamp to mail that envelope, fill out a check (and pay whatever bank fees are associated with his checking account), or purchase a money order, or take the risk of sending cash through the mail.
The seller does not have to wait
I've waited for PayPal payments. I, occasionally, get emails from customers telling me they'll pay by PayPal in a few days.
does not have to think about bounced checks
No, but I do have to think about chargebacks.
does not have to send payment reminders.
I've sent reminders to people, who eventually paid by PayPal.
posted on October 24, 2000 10:49:16 AMA seller, by accepting paypal, is accepting a credit card purchase from me.
You're free to believe this, although it is clearly not the case, based on the excerpt from PayPal's own Terms of Use I posted above. By the same logic you are using, I guess you would also insist that if you were to send a money order to a seller, that you were paying by cash.
I'm supposed to pay extra for that privilege?
Pay extra? You must have missed my post above, where I pointed out that by paying through PayPal, even including the cost of PayPal's fee, the buyer was saving money over paying by mail.
I still fail to see why you believe that, because you are using your credit card, it is the seller's responsibility to pay to have your payment delivered. You might as well insist on free shipping too- that makes just as much sense.
But it's the seller wanting my money in the quickest, most convenient way.
Maybe some sellers. Personally, I don't give a rat's patootie how a buyer gets his payment to me, just as long as he does it. I don't offer online payment for my convenience- I offer it as one of several options for the buyer. He is free to choose whichever method is most convenient.
posted on October 24, 2000 11:16:25 AM
As someone who has been selling retail for almost 20 years and did have a merchant account (which I recently gave up), here's my take:
When a vendor accepts credit cards, it is not just for the buyer's convenience, it is also to increase sales. People priced computers at my store and when I didnt take credit cards, they ordered them from vendors who did. So accepting credit cards increased my sales. But I was stuck with the costs which I passed on to ALL my customers in slightly raised prices. I also added some extra items in for customers who did not pay by credit card. But whichever CC I took had fees.
Now there are a number of similar services, some who charge fees and some who don't. Why is Paypal more convenient to the seller than Exchangepath? If a customer insists on PP, it is because it is more convenient to the customer or the customer is too lazy to join another service. Why should the seller have to pay for the customer's choice when there are other options? If the customer insists on next day shipping, the customer pays for it. If the customer insists on PP, the customer should pay for it.
And as for increased sales, my auction items are not high value and I dont think I would lose sales if I dropped PP. I keep it for my customer's convenience. I only charge the fee if it is a high value item and the customer insists on paying with a CC. http://www.ygoodman.com [email protected]
posted on October 24, 2000 11:41:07 AM
Looks like eBay found the solution, Off the AB.....
*Buyer’s Premium on eBay Great Collections*
Effective October 30, all items on the eBay Great Collections site will be subject to a 10 percent buyer’s premium on the sale of fine goods. This new fee will be added to the winning bid price and will be
paid directly to our sellers to cover costs for value-added services that they must provide in order to trade on the Great Collections site.
posted on October 24, 2000 11:41:16 AM
I myself wouldn't charge customers extra for using Paypal or any other service. As a seller I would be upset if you mention that you accept Paypal in your auction description, but don't mention the extra fees you will be charging me if I use it. I would either mention the fees in the auction description or not mention Paypal. If the buyer asks to use Paypal, then I would let them know about the extra fee. That seems like the best way to do it if you are going to pass along the fees.
"If man were to be crossed with a cat, it would greatly improve the man, but deteriorate the cat." Mark Twain
posted on October 24, 2000 02:16:14 PM
Islander
No I did not mean debit cards - I meant ATM cards. To make an atm purchase at a service station or store, I am charged at the most 25 cents, which I understand is usually to pay for the card reader.
It costs nothing for a Billpoint electronic check.
It costs PayPal virtually nothing to transfer money from one account to another. I believe it costs them a few cents to transfer money from your checking account to a sellers PayPal account.
posted on October 25, 2000 08:55:56 PMFrom information viewed on eBay, passing along PayPal fees is not allowed (these are statements viewed by representatives of eBay).
That's strange. When PayPal started charging fees, I saw the same question about passing along PayPal fees and the Ebay rep said it was OK with Ebay, but you should check the PayPal agreement to see if it is OK with PayPal.
posted on October 26, 2000 05:47:37 AMFrom information viewed on eBay, passing along PayPal fees is not allowed (these are statements viewed by representatives of eBay).
Please explain this Damon. There are only 2 possibilities here:
1) PayPal does not charge their business/premier users fees for accepting credit cards. PayPal charges the fees as payment for a service performed on behalf of the sellers. This is how you justify charging for payments from bank accounts and existing PayPal balances in addition to credit card payments. By charging for ALL transactions and not just for credit cards, PayPal avoids violating the VISA/MC regulations which prohibit passing on credit card fees to the customer (in this case eBay sellers).
If this be the case, then an eBay seller charging a customer a fee for the use of PayPal is completely legal and within eBay rules as it is NO DIFFERENT from charging the customer postage fees to ship their item (in both cases you're passing on the cost of a service to the customer, NOT passing on credit card processing fees).
2) PayPal does in fact charge business/premier account users a fee for processing the credit card transactions. In this case PayPal is in blatant violation of VISA/MC regulations which prohibit charging the customer a fee for using a credit card.
So Damon, which is it?
Number 1 or number 2?
[ edited by abingdoncomputers on Oct 26, 2000 05:52 AM ]
posted on October 26, 2000 04:06:29 PM
Damon, can we get a concrete answer either way from Pay Pal. It's getting close to tax time....and can we get monthly fees statements also?
