posted on October 3, 2000 04:38:24 AM new
Hot off of my e-mail...
*************
Dear PayPal Customer,
Three weeks ago, X.com posted a message on its website to remind
PayPal users of our business use policy. Specifically, our terms of
use require Personal Accounts who "conduct e-commerce on a regular
basis" to upgrade to a Premier or Business Account. We further
defined "business use" of a PayPal account as collecting payments
for goods or services sold on a corporate website, personal
homepage, or other forum. This includes auction sellers, both
individuals who make it a full-time job and those who sell on a
recurring, part-time basis.
Subsequently, a number of users asked us to clarify the policy
further. In particular, a number of occasional sellers wanted a
bright-line rule to know whether they fell into the "business use"
category.
We promised users that we would work to develop a policy that met
several criteria: (1) it was generally fair and reasonable; (2) it
was announced with two weeks notice before it was implemented; (3)
it did not force anyone to upgrade (though it could remove costly
functionality, such as the ability to accept credit card payments
from Personal Accounts); and (4) it met PayPal's need to align the
costs of credit card processing (and other expenses, such as
customer service and fraud protection) with high-volume users who
generate the bulk of our costs.
This email is to announce that policy. While no rule will satisfy
everyone, we have worked hard to choose one that we believe meets
the criteria above.
Starting two weeks from now, on Monday, October 16, X.com will
introduce a new limit on PayPal Personal Accounts: a $500 limit on
receiving credit card payments every six months. Following the
implementation of the policy two weeks from now, Personal Accounts
exceeding the $500 limit will no longer be able to accept credit
card payments unless they choose to upgrade to a Premier or Business
Account. Credit card payments sent to a Personal Account in excess
of the limit will be held as "pending" until the recipient chooses
either to accept the payment by upgrading or to return it to the
sender by refusing the payment. (The sender can then resend the
payment from either a bank account or existing PayPal balance.)
We will provide users with a "Credit Card Funds Received" counter so
they can monitor their status; we will also alter the transaction
history so the funding source for a payment can be viewed. Payments
funded from a sender's bank account or existing PayPal account
balance will not count against the recipient's limit.
Personal Accounts that exceed the limit will still be able to
receive payments funded from a bank account or existing PayPal
account balance, as well as make use of all their other Personal
Account features. No one who exceeds the limit will have their
account locked, frozen, or automatically upgraded; they simply will
not be able to receive additional credit card funds.
The goal of the limit is to reduce the cost of credit card
processing associated with accounts that do not pay fees. In an
effort to closely tie our fees to our costs, we felt it was fair to
limit the amount of credit card payments a Personal Account can
receive. Credit card processing is expensive; VISA(tm) and
MasterCard(tm) charge us for every transaction we process. And as
an online financial services firm, we also have other expenses, such
as bank transfer fees and customer service costs.
We also absorb the cost of keeping both our buyers and sellers safe
with the PayPal Fraud Protection Guarantee. And next month, we'll
be sharing part of the float with our users when customers will be
able to earn money market rates of return on balances left in their
PayPal account.
We intend to keep PayPal free for personal transactions, but in
order to do this we cannot provide unlimited credit card processing
for all users. That's why we are asking the users who benefit most
from PayPal to upgrade to a Premier or Business Account.
If you upgrade to either a Premier Account (for individuals) or a
Business Account (for companies), you'll also receive a range of
premium features:
- Instant Purchase -- Accept payments directly on your auction.
- Web Accept -- Collect money directly on your website.
- Automatic Invoicing -- We'll save you time by pre-filling your
auction invoices.
- Downloadable Transaction History -- Simplify record-keeping with
Quicken, QuickBooks, or Excel.
- 24/7 Customer Service -- Around the clock live phone support.
Plus, YOU WILL CONTINUE TO RECEIVE $5 REFERRAL BONUSES FOR REFERRING
NEW USERS -- a program that will be available only to Premier and
Business users starting on Monday, October 9.
And the fees are low - just $0.25 for credit card payments under
$15, and $0.25 + 1.9% on payments over $15. Compare us to the
competition: a $35 payment with PayPal costs just $0.92;
Billpoint(tm) charges $1.40. (Billpoint charges most users $0.35 on
credit card payments under $15, and $0.35 + 3.0% on larger
payments.)
With 4 million users and over 2 million auctions on eBay(tm), PayPal
is the world's #1 online payments network. And we've made online
commerce more secure by providing Verified buyers and sellers with
the strongest Fraud Protection Guarantee on the web. And, over the
months to come, we'll be developing more features for your PayPal
account. We'll be introducing a shopping cart, dividends on your
account balance, a debit card linked directly to your PayPal
account, bill payment, and even online shopping. And we've heard
your requests and we're ready to deliver our most requested new
feature -- INTERNATIONAL PAYPAL WILL BE AVAILABLE FOR 26 COUNTRIES
AROUND THE WORLD BY HALLOWEEN.
We at PayPal are committed to giving you the payment tools you want
and making them the safest and easiest to use on the web. We know
you have a choice, and we thank you for using X.com's PayPal
service.
Sincerely,
The PayPal Team
PayPal, a service of X.com
www.paypal.x.com
posted on October 3, 2000 04:41:53 AM new
PPD--Thanks for the clarification--just one more widdle question...
For business and premiere accounts--all I saw was:
"And the fees are low - just $0.25 for credit card payments under $15, and $0.25 + 1.9% on payments over $15. "
What about PP to PP transfers and payments from bank accounts and transferring our money from our PP accounts to our bank accounts? Are there fees on that if we upgrade to premiere or business accounts?
posted on October 3, 2000 04:58:40 AM new
Well, I for one think this is pretty fair.
But I still cannot absorb the cost of taking a credit card myself, my profit margin is pretty tight. Any ideas on how to avoid it/ or pass it on to customers? Maybe accepting Paypal but not accepting credit cards at Paypal. Refer credit card customers to ExchangePath or Paydirect, etc. Or charging $1 fee for using a credit card at Paypal, IF we can, which is debatable.
I know some of you are comfortable with eating the cost for credit cards, but for the sellers that can't afford that, how are you going to handle this?
posted on October 3, 2000 05:02:07 AM new
Thanks for the info. I have been following all of this with some interest and wondered what paypal would do. Right now I have a verified personal account and will probably upgrade once there is actually a reason to. Right now I don't see any benefits to upgrading. Once they add a debit card or something like that I will think about it. I don't atnicipate receiving $500 in the next six months but if I do I will cross that bridge when I come to it. There is always my husbands personal account. LOL
posted on October 3, 2000 05:08:49 AM new
Well, this was what I was thinking when they said they will not force anyone to upgrade but would enforce some rules--the old voluntary upgrade with incentives.
I think they are generally fair depending on what they come up with on PP to PP transfers and cash transfers to/from checking accounts.
I think there was some discussion about whether or not you can pass the costs along, but I don't know that there was a definitive answer.
It does give you the option of continuing with a personal account and choosing to reject a credit card payment if you are over your $500 in 6 months at which time the customer can then send it from his checking or PP balance still.
I am personally still mulling it over and am waiting on the answer to the non CC related business costs.
I also want to see what countries they choose to accept payments from come Halloween. International is what I have been waiting for all along anyway.
posted on October 3, 2000 06:03:04 AM new
I think the new rules are very fair! Just a day late, as if it was told to us in this fashion first, the uproar would have been a wisper.
To you folks that feel that this will hurt your profit margin, take a close look at what you are selling, as, your ebay bussiness plan is poorly thought out. You need to be paid for your time. I spend an hour on each auction that I post, this includes pics, ad ,packing, and shipping. I feel that my time is worth $25.00 per hour, so my profit has to average $25.00 per auction. Now if I have mulitiples of one item, that drops to 12.50, as I only have to write one ad, and one set of pics, but I still have to do the emails, packing and shipping. 1/2 hour per item.
Make a bussiness plan, and look at what you are selling and where, think about package deals to sell more items at once, or free auction venues. Ed
edhdsn
posted on October 3, 2000 06:08:48 AM new
This looks pretty good--I think if they had stated this stuff before they would have made it a whole lot easier to abide by.
posted on October 3, 2000 06:24:36 AM new
It all seems reasonable to me. I think they should have made some of the promised features available first, though.
labbie, I'm assuming that the country list will be the same that BillPoint uses:
posted on October 3, 2000 06:59:16 AM new
Labbie - check out http://www.paypal.x.com/cgi-bin/webscr?cmd=p/gen/fees-outside
Looks like Credit Card payments under $15 costs 25 cents, $15 to $500 costs 1.9% + 25 cents,over $500 cost 1.9% + 25 cents... payments from Bank Account balances payments
costs 1.9% for payments under $15, for $15 to $500... 1.9%, over $500 a flat rate of $9.50... if you get paid from someones PayPal Balance under $15 costs 1.9%, $15 to $500 its 1.9%, over $500 a flat rate of $9.50 applies.
The above fees will also apply to international payments made to Premier and Business accounts.
Sounds like they will charging fees no matter where the money is coming from...
posted on October 3, 2000 08:02:30 AM new
The new terms seem fair, but difficult to implement. It would be unfair to offer Paypal and then tell a buyer that you can't accept it because the last buyer put you over the limit. Does anyone have suggestions for the wording of payment options if one wishes to try to stay under the limit?
posted on October 3, 2000 08:12:05 AM new
Just out of morbid curiosity, did anyone at Paypal determine when does the $500 begin accruing on your account? Does it start adding up on 10/16 or is it retroactive until the beginning of your account?
Either way, it's really too bad...the fees are rather fair for credit card processing, but I have absolutely no confidence in the company anymore, considering the many multi-faceted turnarounds both Paypal and x.com have been pulling the past few months.
Cheap is one thing...credibility is another. Paypal has a bit of the former and absolutely NONE of the other.
posted on October 3, 2000 08:19:30 AM new
What I think is really stupid is that they give you 1% cash back if you pay a seller with a Premier account with your CC, but if you pay the same seller with your PP account funds, you get squat.
posted on October 3, 2000 08:24:59 AM new
Looks fair to us...really didn't want to have to sign up with more services,don't like giving all the personal info required to every one and their brother all over the internet. About 80% of our auction customers are paying by paypal. We are a business and have a merchant account also that is much higher in fees, we don't use it on line for auctions. Just wish paypal would settle down and stop all the wishy-washy changes and think all aspects out before they post changes, but this seems fair to us.
posted on October 3, 2000 08:31:45 AM new
I still have a problem with paying fees for non credit card transactions. I would have paid the fees on CC transactions, but I can't see paying for the others since PayPal stated that they needed to cover their CC processing.
And even then, PP is offering 1% rebates to the folks who purchase from a Premiere or Business account, so who is really paying that 1%?
It should really be our choice to give our customers 1% back out of our own pockets and profits, shouldn't it?
Feeling a little cranky since I found out that they are charging for non CC transactions--sorry!
posted on October 3, 2000 08:44:53 AM new
I think basically it is fair. But what is this that I read on another post about having to keep $100 in your PP Account at all times or you will be charged $12.00 a month?? So PP wants to assure their original claim of making money on the float, plus now the fees? I take my money out every 3rd transaction, (about) and if they start this, they get cut out of my auctions entirely....PERIOD!
posted on October 3, 2000 08:47:55 AM new
The 1% rebate was for paying a business account with you bank account, not credit card. And I think the promotion's over......I paid a business account yesterday and it made no mention of the 1% bonus anymore.
posted on October 3, 2000 09:01:50 AM new
I'm going to change my Paypal banner to PayDirect banner and not mention that I accept paypal. Hopefully, that will cut down on the Paypal payments and keep it within the $500 per 6 month limit.
posted on October 3, 2000 09:18:37 AM new
HI heygrape -
Do your buyers use PayDirect? It seems to me that PayPal has the brand recognition right now. One person asked to use Billpoint, but otherwise it's all PP or check/money order. On the other hand, those are options I list in my auctions, so maybe others who use different payment plans simply don't ask.
posted on October 3, 2000 09:23:10 AM new
I'm not happy.
Customers who are using paypal to transfer money from their checking accounts or paypal accounts are doing it for their convenience...yet I will get charged for their convenience.
I don't mind the credit card fees...I don't like fees on a cash transaction.
$500 every 6 months...that is $19.23 a week. You have to be a really part time seller to stay within those limits!
posted on October 3, 2000 09:32:32 AM new
PayDirect is relatively the new kid on the block so it doesn't have a lot of name recognition yet. But I've had several buyers use it so far, so it IS catching on. Yahoo!
posted on October 3, 2000 09:47:52 AM new
Don't be naive. PayPal has operated just like a heroin dealer, and many other Net operators do the same thing.
They give it to you free until you become dependant, then the charges start.
The "processing fees" that PayPal now clamors about have always been there- remember the "float", that's how they were supposed to make their money.
Everything is free until someone can find a way to make money from it. Remember water ? There used to be free drinking fountains all over, now it is sold by the bottle !!
However, PayPal is still less expensive than developing your own credit card processing.
posted on October 3, 2000 09:53:07 AM new
We signed up for the Premier/Business Account a few months ago when it was first introduced, so the changes are nothing new to us. The fees are very reasonable when compared to regular Merchant Accounts; there are some that charges a 15% fee.
For those of you that are operating on a small profit margin, and have difficulties absorbing the CC cost, you might want to include it in your TOS. In your TOS you can mention that there is a 2% charge for CC payments, this covers the 1.9% + the $0.25.
To understand the changes that PayPal is making we should look at the situation from their perspective. They started out with the free service because they were hoping to earn enough from the floats on the member's accounts. Most PayPal members withdraw their funds immediately after it is entered their account, leaving nothing for PayPal to earn interest on. PayPal is here to make money and to offer a service; they are not the Red Cross or some charitable organization. Processing all these transactions, mailing out checks, making bank transfers, paying CC processing cost, and other charges are costing them money. They have to find a method of covering these additional costs since members are not leaving their money for them to profit from the float.
Our company buys and sells on auction sites, so we keep money in our PayPal account to make payments. It is so much convenient to make a PayPal transfer than writing checks, buying money orders, printing auction information to go with payments, buying stamps, stuffing and mailing envelopes.
We do not mind them earning interest on our float while it sits in their account, because it is there to serve our purposes also. One of our attrictiveness in buying from a seller is the acceptance of PayPal, because it is so much easier to make payment.
That is my sermon for the day, so you can all wake up now. LOL
posted on October 3, 2000 10:11:58 AM new
I also can't see having them charge us when the buyer is using his PayPal balance. I can justify it if they are using a credit card though.
