Today we are breaking down PayPal’s new changes on user agreement announced on 7th April 2019 that will come into effect on May 7th 2019 and what it means for businesses. We will be focusing on the thorny issue for businesses, that is Refunds.
PayPal Use Agreement Changes on Refunds (April)
Currently, when you sell items or services, PayPal charges you a commission of 2.9 percent plus $0.30 per sale before the money arrives in your account. They customer is not charged. If a customer asks for a refund, he will receive his money in full except for a small transactional fees.
In the new user agreement on Refunds, PayPal says;
This means that in the case of a refund, PayPal will keep the fees (commission (2.9%) + fee (30 cents) you were charged when a customer paid for products or services you offered.
For example, if are offering a course worth $1,000, the customer pays for it, but changes their mind, decides to cancel subscription and request for a refund, you will not have only lost the customer, but $29 that was charged as commission when the seller paid $1000.
It will be a double tragedy if you are selling physical products like computer parts and your business is responsible for shipping fees.
This is a major point of concern for sellers using PayPal.
Why Did PayPal Implement this Policy
Maybe this must be a case of pushing sellers to ensure that they sell or offer services that meet customer satisfaction to a point where there will be little or no refunds at all because any refund is a direct and major loss to the seller.
PayPal Policy Update
You can read the full April 7th 2019 paypal policy update.
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