Merchant Innovation

PayPal Adds Return Shipping Cost Coverage To Reduce Online Friction

PayPal's New Return Policy

Even online retailers that have dabbled in free returns know the financial toll that can take on a small business' bottom line. However, charging customers for the privilege of returning unwanted goods is arguably the greater of two evils, and PayPal is biting the bullet in the hopes that it is more profitable.

PayPal Canada announced on Monday (May 9) that it was starting a new "Return Shipping on Us" initiative to remove the risks associated with online shopping and, hopefully, boost sales in the process. Kerry Reynolds, head of consumer marketing with PayPal Canada, explained that the 10 refunds on eligible purchases online should be more than enough reassurance to get even the most skeptical shoppers online and closing out sales.

“Canadian eCommerce is expected to grow by 8 percent in 2016 to $34.5 billion," Reynolds said in a statement. "With online retail competition heating up locally and internationally for Canadian businesses, Return Shipping on Us is a competitive differentiator. Our investment in this service is a potential revenue driver for smaller online sellers who can’t afford to offer free returns to their customers.”

PayPal also cited statistics that back up a peculiar aspect of shopping as a Canadian consumer — fees associated with cross-border commerce. Though 10.7 million Canadians spend on some form of cross-border annually, 38 percent would likely buy more — and more frequently — if free return shipping was an option. In fact, 25 percent of all cross-border Canadian shoppers feel as if high return fees are "holding them back."

A handful of fee reimbursements every year isn't enough to help PayPal solve cross-border returns, but it might be just the right amount to show skittish consumers that the deals to be had at American and other countries' retailers are worth the risk of returns.

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