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! 😞 😮 :_|

[llee2]

Shooger,

I think the standard rate is 2.9% + 0.30USD (or 0.55 CAD), but still it's going to be a big dent in already slim margins.

I'm a little confused about tiers (though it doesn't really matter because I will be downgraded either way). Paypal's site says $3000-$12000 CDN but when you read the chart they post, it says it depends on what currency you receive in. If you are mainly receiving USD payments, then the threshold for the tier is $3000 USD and not $3000 CAD.

:-(

[llee2]

Oh, and why is Paypal only gouging Canadian sellers and no one else? And why do the Pinks not visit us here anymore? And why is the sky blue and the grass green?

Grrrrrrrr....

[shooger]

llee2, that is the rate for Canadians accepting from Canadians. If you're accepting from a US buyer (or any non-Canadian buyer) then you have to add an extra 1% now. So that's 3.9% 😞

[mevans_dot_net]

The way I understand it, it will be 2.9% + .55 CAD for the lowest level @ merchant rate. The 3.9% is for payments outside Cda & US. Still not good but not too much of a price increase @ .4%

Now, what I'm wondering is if you accept only US$ then what are they going to do? I don't want to pay that $.55CDN when I'm only paying $.30US now. That is only $.40CDN at 1.34 - the true current exchange rate, at least for today. Ebay and Paypal are terrible for abusing exchange rates in their favour which is why I have my eBay and Paypal accounts all in US funds and I use my US Waterhouse bank account to transfer all Paypal balances to, and pay seller fees.

[llee2]

I think the extra 1% is for non-Canadian or non-US buyers only. US buyers are lumped in with the 2.9% Canadian crowd according to their chart. Still sucks, but sucks less than 3.9%.

[mevans_dot_net]

Shooger, I'm pretty sure we're combined with US in this case - on the Paypal site is the "Canadian Fees-Domestic" table and it says: "The table below applies to Canadian sellers doing business with buyers in the U.S. and Canada." We should be ok. Its outside the US & Cda that the rate jumps to 3.9% but its always been higher anyway.

Correct me if I'm wrong. I'll have to adjust my auction pricing if I am!

[llee2]

mevans,

I think the 0.55 cents CAD only is applicable if the payment received is in CAD currency. If you accept a USD payment, it will still come out as 0.30 USD. It looks like Paypal wrote their little update with the thinking that most Canadian sellers deal mostly with Canadian buyers and receive mostly Canadian dollar payments. Shows how much attention they pay to us yet again.

[shooger]

Yeah, it's misleading (in our favour) because it says "A domestic payment is a payment between two parties in the same country." The domestic chart is the one that says the basic fee (which most of us will be paying) is 2.9%.

There's a link that says "See Canadian Fees-Cross-Border", and that takes you to the table where everything is bumped up 1%. In small print, it says "The table below applies to Canadian sellers doing business with buyers outside the U.S. and Canada. Payments from U.S. buyers are charged under the Canadian Fees - Domestic Fee Schedule."

That's a relief.

Still, I do some business outside the US and Canada. So I'll go from a 2.2% rate to a combination of 2.9% and 3.9% rates. 😞

Notice they use the "fee restucturing" term, which eBay also used when they increased their prices. Do they think anyone is going to buy it? It's an increase - don't call it restucturing!

[mevans_dot_net]

No kidding! But then its not like we'd use another payment processing service for CDN$ other than Paypal, right? (note the sarcasm!) If a buyer wants to pay me in CDN$, fine, no problem. Here's my bank account number, drop into any TD Bank, or use Certapay and email me the cash. Money orders work great too, here in 2 days vs. 14 days from the US.

[llee2]

Still don't understand why this change is for Canadian sellers only.

[mevans_dot_net]

Only in Canada you say? (remember that one!) I thought it was right across the board. Hmmm.

They probably got fed up with all the Canadian sellers getting US bank accounts and losing out on that $.50 fee and their artificially inflated exchange rates. So they're hitting us with this.

[llee2]

Alright, now I'm really confused. Just got an email from Paypal stating

"There will be no change to the current fees due to a one-year grace period that PayPal is implementing. This means that through August 6, 2005, you will not pay more than your current rate and may even be eligible for a lower rate."

Means us lowly <$3000/month Canadian PSers will get to keep 2.2%+0.30 for another year?

[shooger]

I didn't get this email from PayPal... but then again I haven't gotten any payment notification emails from them, either.

[zarzuella]

This is lifted from the email Paypal sent:

Will there be any immediate effect on sellers?
There will be no change to the current fees due to a one-year grace period that PayPal is implementing. This means that through August 6, 2005, you will not pay more than your current rate and may even be eligible for a lower rate. Once this grace period has expired, receiving fees will be determined at the beginning of every month based on the seller's received volume in the previous calendar month.

[zarzuella]

Which is, of course, going to make this increase difficult to build into your pricing structure!

[shooger]

Spoke to my workout partner (and eBay semi-partner) at the gym today. He said he's going to start accepting Money Orders instead of only accepting PayPal, because of the price increase. I'm not sure what I'm going to do, yet. The grace period softens the pain, which is I guess why they did it. Less people are going to whine and complain, if PayPal can just reply "well at least you've got time to adjust!"

[zarzuella]

I accept money orders and personal cheques as well, but the sad truth is that 95% of my buyers prefer to use Paypal.

ROCK Ebay Sellers HARD PLACE

[muminlaw]

I accept money orders, personal cheques and Western Union/BidPay -- NO painpal! I was just on the verge of rethinking my position on paypal when they came out with this decision. End of rethinking!

At least when you're dealing in collectibles, your item is often unique and if a buyer wants it, he really wants it, and he'll live with your payment options. I find most of my European buyers use BidPay, most Americans and Canadians send cheques, and only a few comment that they'd rather use paypal, but when I explain the facts of paypal's punitive international rates and exchange, they are usually sympathetic. I don't think I've lost any sales because of it.

Glenda

[shooger]

"I don't think I've lost any sales because of it."

Welllllllllll I wouldn't go so far as to say that. Maybe those buyers who only like to pay with PayPal viewed your auction and then went to buy elsewhere, without dropping you a line to let you know. You can't really guess how many buyers passed you up because you didn't take it. With PayPal's big push into eBay lately (the two companies becoming very incestuous) any seller not offering PayPal is probably turning away half their buyers (or more). It's sad but true. Accepting PayPal is basically like accepting eBay. If someone has eBay, chances are they're hooked up with PayPal as well. I know that if I want something, I'm going to pay with PayPal 100% of the time. Even things I really wanted, and were ending soon at a really low price... I just passed them up because I couldn't pay with PayPal. I'm not going to buy a Money Order, pay Canada Post to deliver it, hope it gets there, and wait a week or two before the seller ships... and then have the item go missing and have no way to file a chargeback. But that's just me!

That said, I'm going to continue accepting PainPal (good nickname!) but I'll probably start accepting other methods for those who so desire.