PayPal announces fees going up!

[shooger]

Yup, PayPal is putting up their fees. They're calling it "new performance-based pricing" and "New Tiers to the Fee Structure" but it's a price increase, unfortunately. The incestuous eBay-PayPal relationship gets a little more entrenched.

Goes into effect in six weeks.

Right now, if you accept $1000 US in payments per month, you get a 2.2% rate (they call this "merchant rate". Otherwise, you get a 2.9% rate.

New rates: The basic rate will be the same (2.9%). To get merchant rates, you need to accept $2300 US in payments per month! And even then, you only get a 2.5% rate. To get the 2.2% rate, you have to accept $9000 US PER MONTH! That's nine times as much as before.

And it gets worse, if you can believe it.

Those rates will only apply for Canadian PayPal users accepting payments from other Canadians. If you're accepting from anyone else (let's face it, that's 95% of our business) you have to add 1% on top of your fee.

For most of us who don't sell $9000 US per month (all but a few of us here I imagine) we'll be going from the 2.2% merchant rate, down to the 3.9% basic rate.

If you accepted $2100 US in payments under the old fee scale, you'd pay $46 in percentage fees. Under the new scale, you'll pay $82. Yes - nearly double.

Of course, I left off the fixed fee attached to each payment, which is $0.55 Canadian on top of the percentage.

It's funny, because just the other day I was saying in another thread: We just had a Canada Post increase, an eBay fee increase, and the Canadian dollar is up - squeezing sellers down to our last penny! I said "all we need now is for PayPal to announce an increase".

Sorry guys - I think I forgot to knock on wood! 😞 😮 :_|

[shoplineca]

Following the end of an auction, I send the winner an email setting out all the payment options in the order I prefer to be paid.

With Canadian customers, I start with telling them they can deposit directly to my bank account through a local branch at no charge to them. Then I suggest that they can email their payment from the convenience of their home, followed by PayPal as an option, then BidPay and then smailmailing a money order.

Even though it is my 3rd option, at least 75% pay with PayPal.

Malcolm

[mevans_dot_net]

I'd have to agree with shooger. A lot of buyers do look for Paypal as an option. Although it would be easier to not accept it when you deal with collectibles as they are one of a kind, bidders may not bid as high or at all on occasion. You'll never know for sure.

I would say Paypal is a necessary evil for most of us. Its the only way I pay for auctions I win due to the security of filing a chargeback and the fact it speeds delivery.

Having said that, I still wish as a seller I didn't have to use them. They get their fees from our accounts when/if we accept them as a payment option, but they are on the buyer's side, plain and simple. I also don't like the way they have worded their policies so that they can just help themselves to our money without so much as an explanation. Its happened to too many people, including me. Let me tell you, I went ballistic. I filed a complaint with the BBB and was about to launch a full scale attack with complaints to any government agency I could find when all of a sudden the $75US appeared back in my account with a phone call (!) from a very nice manager-lady at Paypal saying all was resolved. During that episode I found many a website detailing some very disturbing practices Paypal had and also a number of sellers that were refusing to deal with Paypal at all (they had links to these sites in their about me pages). This was about 2 years ago.

Now that eBay has taken them over, I think things have improved. I'm sure eBay has done some cleaning house over there. Or maybe Paypal just wised up after a few lawsuits. Regardless, I looked past the issue enough to use it for the business benefits but I'll never trust them again and would switch in a minute if I found a more reliable payment processing service that offered the same ease of payment to my buyers.

The fees I don't have a big problem with. For what they do and the fact there's no investment on my part other than the 2 minutes it took to set up the account, I'm willing to pay 2.2%. How much would it cost to get your own credit card swiping machine? And then there's either long distance phone calls or SSL server to take the info online.

[muminlaw]

I can't really disagree with you on the buyer preference for PayPal and in most markets, that's probably a selling necessity. My point was, that in some niche markets, where you're dealing with collectors and unique collectibles, the buyers will buy regardless of payment methods required.

We've been in our particular market for the past ... migawd has it really been 40 years?? ... and we know the major buyers. We all belong to the same collector clubs and we've been dealing together for all those years. If they were required to fly to a location to pick up a rare token personally, they'd do it in a heartbeat, and they'd pay whatever it takes to get it!!

I guess mainly what I'm trying to say is that I'm really grateful that I don't have to accept painpal ... yet!!

Glenda

[mevans_dot_net]

Oh boy! Do I wish I was in the same position 🐵 Like I said, I'd drop it if I could.

[vesivus]

I'd like to add my 2 cents! 🙂

I'm a newbie seller AND I'm a young(ish) guy. I grew up just as the internet was coming into its own -- and I can tell you that PayPal is beginning to resolve A LOT of fears of online identity theft (ie: Submitting your credit card info online).

I can honestly say that 98% of my business is with PayPal users, although I must admit I tend to deal with people my age or younger, given the type of merchandise I sell. We tend to be a lot more comfortable with this technology.

I also like being able to accept credit cards -- we all know how much more money people spend when they don't have it. Heh heh. I looked into getting a real merchant account with a machine, etc. to accept credit cards -- MUCH more expensive than PayPal. 2.2% is pretty cheap (and I just got my Merchant Acct. accepted by PayPal. Yay!)

In any case, now that eBay IS PayPal (somebody mentioned incestuous -- well -- they are the SAME company now, for all intents), we can look forward to more consistent integration, etc, and YUP more fees.

Here is the link to the new PayPal policy:
PayPal Policy

It mentions that we, as Canadians, will still get the cheap rates, although the Merchant Rates will go 3-tier immediately for new Merchant Accounts and in August 2005 for existing accts.

Thanks for listening to me rant. 😜

John

[mevans_dot_net]

Ya call that a rant!? You ARE new around here! Ahhh, yes, its a Canadian rant. Whole different animal than the US rant.

Drop into the US PS discussion boards and you'll see what ranting is all about ... and more! Just don't forget the Kevlar 😉

Welcome John!

[rd1000]

I believe the new fees take effect Aug 6, 2004.

My Paypal fees have been 4% of sales with the dicount. Without the discount, I am looking at 5%. I would rather my customers get that money. I am going to start offering a 5% discount if using any payment other than Paypal.

I am seriously considering throwing in the towel. Between Ebay, Canada Post and Paypal increasing fees, it is hard to keep up.

[mevans_dot_net]

It has been a tough year. Seems everyone decided to up their prices at the same time. But there is a 1 year grace period for Paypal. The new fee structure doesn't come in until August 2005.

[rd1000]

I am pleased to hear that, but where is that information? I went to the web site and everything I see is Aug 6th, 2004.

[vesivus]

It's in the link I posted above (but you NEED to be a merchant account NOW ... if you become one later you get the "new" pricing immediately.

Here's the link again:
NEW PAYPAL POLICY

Also, to make it simple:

Canadian accounts that are already receiving the current merchant rate as of June 15, 2004 will (through August 6, 2005) be charged no more than 2.2% plus the fixed fee for transactions with Canadian and U.S. buyers, and 3.2% plus the fixed fee for cross-border transactions, regardless of transaction volume. Otherwise, each seller's tier will be subject to adjustment at the beginning of each month based on the seller's transaction volume in the previous calendar month.

Crap. I just read that... it says you had to have a merchant account on June 15... I might have applied ONE FRIGGIN DAY too late. *sigh*

John

[rd1000]

HI John,

Thanks for the info. Hope you got in there on time.

Rob

[shooger]

vesivus, sorry that you didn't get merchant rates on time! All I can say is, enjoy it while it lasts! You have six weeks.

How come only some of us got the email from PayPal that said current merchant rate getters would have a one year grace period? I've been getting merchant rates for about 9 months, but I didn't get the email. A friend of mine did, though.