PayPal caused quite a stir on June 11th with this little tidbit:

You can read the full post here.

1. Refund Prices – Starting August 10, PayPal will retain the transaction fee (typically $.30) when a seller issues a refund (U.S. and Canada merchants).
2. Chargeback Prices – Starting August 24, we’ll be increasing chargeback costs from $10 to the typical industry rate of $20 (U.S. merchants only, eBay merchants enrolled in the PayPal Preferred program are exempt).
3. American Express Card Acceptance – On July 13, PayPal and American Express will enter into a new card processing arrangement that requires merchants to establish a direct contractual relationship with American Express. You’ll need to accept a new agreement with American Express if you want to continue to accept American Express cards directly through Website Payments Pro and Virtual Terminal. PayPal will continue to service American Express transactions. As part of this new agreement, American Express pricing will change to be on par with their typical industry rates. This only applies to taking American Express credit cards directly. There’s no change if a consumer chooses to pay with PayPal, no matter how the account is funded.

When I read this, I actually said aloud, “You d*cks!”

(Yup, I called them ducks. You know me so well.)

Firstly, most bloggers have this news under the heading of “PayPal fee increase” which are the three little words that give me the night terrors. Ever since eBay bought PayPal, I’ve been waiting for the seemingly inevitable day when they’d jack up their transaction fees. But while eBay has owned them since 2002, they haven’t actually mucked with fees much at all and never really raised the rates from the original. So while there is plenty to get mad at in the above, they didn’t actually touch the transaction fees and, considering this was what I’ve been dreading for ages, I was actually a bit relieved when I read this.

Now I have never experienced a chargeback in my life so I have no idea if I should be worried about #2 or not. This may have been luck or I may be PayPal Preferred (I looked through my account and couldn’t tell if I was or not) so this one is up in the air for me.

And #3? Not gonna lie, that one went all teacher-in-Charlie-Brown while I was reading it. But it seems like there will be a separate rate and agreement for American Express. I always feel like Amex is the jerk of the credit card companies with its annual fees and the fact that pretty much no place actually takes them. So having no idea what these new fees will be like, I can’t say how I feel about this. If I can just refuse to take Amex instead of having to hoop jump, that’s cool with me.

But I resorted to water fowl name calling because of the first one. First, you encourage buyers to return more than ever. Then, realizing you lose money on returns you decide to penalize us sellers on every return by keeping the 30 cents transaction fee. How on earth can you justify charging a transaction fee when a transaction never happened? How can you justify financially penalizing sellers when they are doing the right thing and refunding? Making them lose more money while they are already in a situation where they are losing money? Not cool!

I don’t see how you can possibly spin this as either fair or in the best interest of buyers. Giving a sellers an impediment to not refund can only hurt the marketplace as a whole. Sellers on AuctionBytes are already plotting on how to stick this fee to the buyer or otherwise take revenge. Giving the sellers another reason to be mad at the buyer for asking for a refund isn’t the way to make a happy to serve you Amazon environment, eBay, it’s the way to make everyone even more angry at each other.

I am totally, massively angry about this on a “it is just plain not fair or right at all” level.

And yet…

It’s 30 cents. OK, yeah, its a big deal when you talk about volume. But if you are doing that huge a volume of returns, maybe you have bigger problems than PayPal, if you know what I mean.

When I heard “fee increase” I figured it would be one across the boards, raising fees on every single transaction. Assuming they had to increase fees eventually, in a weird way, I feel like this probably the least painful way they could have done it. Instead of hitting us on every single transaction, they are only hitting us on reversed transactions which should be a small percentage of your sales overall.

So it’s wrong and unfair and a total duckweed move. And yet, if a fee increase was coming anyway (and we all knew it was) then this may be the lesser of evils. After all, if you do your best to keep your buyers happy, in theory you wouldn’t have to do that many refunds in the first place.

As for those of us that also have off-eBay e-commerce solutions, I think we win most of all. Because, if they’d have raised transaction fees, we’d all be hit big time on every single sale. Now, instead, its only a fee for sellers doing refunds and, frankly, refunds are fewer and far-er between off eBay. So this change may actually not affect us in a big way at all.

Maybe it’s because I was expecting so much worse, but I don’t hate this. You?