PayPal Changes Seller Refund Fee Policy

PayPal has decided to once again collect a fee when a seller issues a refund.

While the company had rolled back the policy in April, it has decided to reinstate collecting the initial 2.9 percent commission fee sellers give up during a transaction, even when the seller is refunding a customer in full.

“Earlier this year, PayPal updated its User Agreement to change our refund policy,” a PayPal spokesperson told The Verge. “In line with industry practice, and according to our updated policy, we do not charge fees to process refunds, but when a seller refunds a transaction to a buyer, the fees originally paid will not be returned to the seller. The policy change is going into effect beginning on Oct. 11, 2019.”

“We believe that this policy change is in line with industry practice,” the spokesperson added. “We know businesses depend on us, and the decision to update our policy was not made lightly. The policy change allows us to align more closely to our cost structure, to the policies of our payments partners and to industry practice. We only adjust our policies when we are confident the changes are fair and aligned with the value that our services provide to businesses.”

PayPal has also been looking for ways to help its sellers. Last week, the company announced it was rolling out a new promotion ahead of the holiday season that will make it possible for their merchants to offer PayPal Credit customers zero-interest installment financing for any purchase of $30 or more.

Through Easy Payments, customers with a basket size of between $30 and $99 will be able to finance that purchase interest-free for three months.

“Easy Payments will function very much like an installment loan, except that it is sitting on top of an existing line of credit,” Susan Schmidt, PayPal’s U.S. vice president of Consumer Credit, told PYMNTS. “We’ve had a version of this feature available for years — our focus here has been how do we make it a slick, fast experience that is beneficial for both merchants and consumers. And so far, merchant response has been overwhelmingly positive.”