On April 14th, PayPal rolled out new changes to their terms of service leaving the broad audience of customers and retailers it serves disappointed.
Here is a glimpse of what you should expect in the new changes:
The high cost of refunds
Prior to the changes, PayPal’s refund policy was as follows:
• The seller was entitled to return part or full payment to the buyer.
• PayPal guaranteed to refund the seller the 2.9% transaction fee.
• The buyer incurred no charges on neither the refund nor the original purchase.
In the new terms of service, as the seller, you will be expected to refund the buyer with the purchase amount. However, PayPal won’t restore the 2.9% transaction fees to your account
Whether it is a reversal or refund, the seller will be accountable for all fees associated with a purchase. For low priced transactions, it may not have a significant impact, but for high ticket sellers, this will cause huge losses
How PayPal will be affected
Small business owners are annoyed by the changes, and some are discussing charging extra fees for returned items to cancel out with the loss of things returned.
This, however, is a temporary solution and can’t solve a canceled transaction where the item was never delivered.
Other traders are modifying their return policy to one that is more convenient to customers.
Paypal refund was also previously used to pay back consumers who paid more on shipping fees than the required amount. This is where a buyer purchased multiple similar items, and the seller reduced the shipping charges instead of charging double the fees.
This was a way to award multiple purchases, but now, sellers are discouraged to gift this discount. In a way, the buyer is also affected by these changes.
More and more changes
Other policies will also be redrafted. These include:
Removing the static rate of pricing on sending money outside the US to friends and relatives (note: not for business transactions).
As a PayPal user, you will be subjected to a 5% fee that ranges between $.99 to $4.99 and varies with the amount you send.
This new fee applies to all countries contrary to the previous fee that varied according to the recipient’s country. The rate of currency conversion will be 3.25%, and PayPal will charge an additional exchange fee for senders to foreign countries.
Paypal is also asking its users to link their accounts with PayPal cash or PayPal cash plus so that they can be able to hold or transact money from their PayPal accounts.
Notification for new changes will be sent at least 21 days before any user policy changes while businesses will have a minimum of 5 notification days.
When will the changes be implemented?
The refurbished policies will be officially implemented on May 7th, 2019 leaving sellers frantically rushing to change their store policies to curb losses or close their accounts which is not an option for most traders.
Author Bio:As the FAM account executive, Michael Hollis has funded millions by using bad credit merchant account instant approval solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.