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@rose-dee wrote:Aha! Here's the rub (copied from the link that 'recped' posted), and no doubt why Paypal believes very few buyers will actually bother taking advantage of this offer-- it's quite a paper-trail rich, bureaucratic style process!
Very clever on the part of Paypal to offer something for free that only the most persistent and well-organized will get the benefit of. As 'recped' says, there are few buyers who initiate a return to begin with, what percentage of that very minuscule number of customers will go through this set of hoops (and have the patience to wait for Paypal's adjudication on their submission) to get their money back? Very few proportionately I would think. Brilliant marketing!
"Please review the Refund request claim form carefully and complete all fields when you submit a Refund request. In addition to the completed Refund request claim form, You will need to provide evidence of the return shipping costs You have incurred, as follows:
Your proof of purchase using PayPal. This could be:
- The email confirming your purchase in full using your PayPal account; or
- A screenshot of your PayPal Transaction Details page showing you paid for the item in full using your PayPal account.
Proof of the return shipping costs and proof that you successfully returned your item to the merchant. These 2 proofs depend on how you paid for the return shipping costs.
If you paid the return shipping costs to the post office or a courier service,you must send:
- The receipt from the post office or courier service, or your bank or credit card statement showing the amount you paid for the return shipping costs (if using a bank or credit card statement, please redact everything except your name, the last 4 digits of the account, and the line item for the relevant charge); and
- A document proving that the purchased item was returned to the seller (e.g., a copy of the receipt with recipient shipping address, or a photo of the package with the recipient’s address visible).
If the return shipping costs were deducted from the refund of your item, you must send:
- Proof showing the initial price of the item returned; and
- Proof showing the amount of the refund (e.g., the email message that acknowledges receipt of the return, or the PayPal email confirming the refund of your item)."
Yup it's just like mail-in rebates, lots of people qualify for them but a large percentage of those will never take the time to apply for the rebate.
I pin grocery store coupons on the wall in my kitchen, every few months I look them over to throw out the ones that have expired because I never remembered to take them with me when shopping (but that ad for the product was on my wall for months and I was reminded by it daily).
I meant to look at the requirements for applying, I figured they would be like you posted, a bit too involved and complicated for most people to actually take advantage of the offer especially if we are talking about just a few Dollars.
Yeah, I was actually thinking of rebates too in that context. Paypal knows what marketing experts and statistics have learned about buyer behaviour and human nature.
Furthermore, can you imagine the person who actually goes through all this trouble to submit his request and then gets turned down because some paperwork is missing? Ha!! I doubt he'll bother the next time, so offering several "refunded returns" may, from Paypal's standpoint, only mean offering the first one, and possibly not even paying for that one. Doubly brilliant.
Well, I think I'll be putting Paypal's banner up (on my own website). 
Maybe eBay has some lessons to learn here.
"the shipping costs be off-loaded to sellers."
The cost of that program is already included in the fees charged to sellers. It is all part of the "cost of doing business'. One needs to look at the "big picture", and I mean big. PayPal is a service receiving fees from sellers (nobody else). It is highly profitable although the margins are razor-thin.
All financial information is public since eBay is a public company and can easily be found in their quarterly or annual reports.
Looking at the first quarter of this year (Jan 1 to Mar 31, 2015), we see
PayPal handled 1,039,700,000 transactions
worth a total of US$ 61,413,000,000 (only 24% came from eBay transactions; 76% from other sellers)
PayPal's take rate averages 3.43% (a bit less than last year's 3.55% for the same quarter). That would include the $0.30 (or whatever) transaction fee, plus their 2.90% (or less for large users), plus their 1.00% cross border fees, plus whatever other fees PayPal gets from sellers.
Expense Rate is 0.94% (mostly payment to credit card issuers)
The loss rate is 0.31% (that may seem very small but represents almost $200,000,000)
So when PayPal offers "free shipping" on returns not otherwise available to qualified buyers, whatever their costs are will come from that $200,000,000.
An extra $10,000,000 or $20,000,000 either way will not make a difference to PayPal.
All of it is paid by sellers when they pay their PayPal fees.
It is highly profitable although the margins are razor-thin.
PayPal does not have razor-thin margins at all.
Within the payments business your gross margin is the difference between your "take rate" and your "expense rate". In PayPal's case that's over 70%, even taking the losses (default/fraud) off the top still gives them a whopping 64% gross margin.
That would be better than Apple and probably better than Microsoft and one reason why PayPal is such a gold mine.
Enabled payment volume like active users are two metrics critical to the payments business and how the analysts view the company but they don't have anything to do with an Income Statement or Balance Sheet. The total value of payments does not appear in the revenue section of their financial statements because they are not revenues.
"Paypal was levying a surcharge whenever an amount less than $150.00 US was withdrawn to a bank account, "
I just learned something new.
I know that Canadians who have a US$ accounts held at a bank located in the USA had no withdrawal fees, ever, no US$150.00 minimum..
I also know that Canadians have to pay a small withdrawal fee ($0.50) when they withdraw less than Cdn$150.00. I suspect the same may apply worldwide for PayPal users using currencies other than the US$.
Those fees collected from withdrawals of small amounts would likely come mostly from sellers in any case. Why would a buyer withdraw money from a PayPal account? Where did the money come from? That would be a minuscule exception.
Looks like they did away with the low value withdrawal fee for Canadians. The last reference I can find in the UA updates was in 2012 when it was still in effect.
From the current fee schedule FAQ.......
What are the fees for withdrawing money to my local bank account?
PayPal does not charge you a fee for withdrawing Canadian currency to your local bank account. However, there may be a Currency Conversion fee for withdrawing other currencies to your local bank.
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