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Paypal adds new fees with no notice

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Last month Paypal quietly began charging new fees to its customers who have personal accounts without actually notifying them of the change. The new fees apply to payments marked as “Goods” or “Services.” Such payments were previously free but will now be charged a fee of about 2.9% plus 30 cents. When confronted, Paypal claimed the new fees had been announced in email, news articles, and Paypal’s own blog. However that turned out to be untrue. The only thing mentioned in those announcements was Paypal’s decision to allow its customers with premium accounts to make personal transfers for free.

“We didn’t want to make a huge formal communication out of this pricing change, because we weren’t really adding any fees, and we were hoping it would be a more useful experience for people,” Charlotte Hill, PayPal’s PR manager said.

That is beyond inexcusable. When Paypal, or any company, makes a decision that is going to cost its customers money, the first thing they need to do is communicate this to those customers. I’m not sure how Paypal thinks taking more money from its customers equates to a more useful experience either. I get payments via Paypal from my clients every month and Paypal always takes a chunk for themselves. I think they need to be charging people who send money via Paypal, not those who receive it. Paypal gets a good $50 or so a month in fees from me each month, fees that come from money I’ve earned.

Read [PCWorld]

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  • Glenn Robertson

    I didn't receive any notice of any change of terms from PayPal; not happy.

  • Jaxim

    @Benji
    >That’s ridiculous. I shouldn’t be charged to make a payment.

    I'm pretty sure Paypal doesn't charge anything for the person making the payment. It charges a fee from the person who RECEIVES the payment. This is a normal practice in credit cards which paypal is almost like a Internet version. I see this practice as being fair but they should be more forthcoming before the change was made.

  • Fred

    It sounds like what you're mad about is teh fact that it's you,and not your customers,that's getting charged here.

    I hope I never do business with you.

  • Sue

    Fred, your rudeness is not appreciated nor necessary. I have no customers, I have no idea where you got that from. I am a freelance writer. The people I write for pay me via Paypal. I am not a merchant or a retailer.

  • Sue

    Oh and by the way, I'm not mad at anything. I was reporting a story. However I do indeed think it is wrong for a company to start charging its customers for something that was formerly free and not tell them ahead of time. That is poor customer service.

  • Steve C

    Sue, when ever you buy gas, groceries, books, paper, etc, they are already priced as if a user is going to pay with a credit card. Big merchants like wal-mart negotiate with Visa/MC/Amex to minimize their exposure. So, if I buy groceries with cash, the merchants make a bit more money from me. If I use my AMEX, they break even and I get a few percent in rebate for using the card. So, rather than directly charging the paypal fees to the customer, price your product in such a way that the fee is built into the price. Assume that everyone is going to use a credit card.

  • Aaron Pinko

    Scary, once agian the general public gets SHAFTED. Enough is enough.

    RT
    www.anon-web-tools.net.tc

  • ASSEMbler

    Ebay gets a cut, then paypal.

    Basically they get to double dip.

    I think this deserves the attention of the government.

  • Pat

    good to see Paypal hasn't changed its work ethic.

  • Jason

    I don't think Fred was being rude. He said exactly what I was thinking. Besides, if customers were charged for using Pay Pal, they would either never use it or the vendor would have to have some sort of complicated pricing system ($x for paypal, $x for google checkout, etc…).

    I personally think it was rude to flame him for not knowing the intimate details of what you do. Most people use Pay Pal in a customer/vendor relationship, not for payment for employment. So his reaction was quite normal.

  • martin

    Yeah, I just sold something expensive on eBay and got the fee charged (the MAXIMUM fee of 2.9%) and now I can't afford to ship it. I sent the support line an email telling them that this is unacceptable and demanding they give the fees back.

  • JayDee

    Don't like Paypal? DON'T USE PAYPAL. It's the miracle of the open market – they're not the only game in town.

    It's not that hard to become a credit card merchant yourself. Or maybe have people send you a check.

  • martin

    Hey! Guess what? I CAN'T not use PayPal. They ARE the only "game in town." They enjoy a virtual monopoly over eBay because they are 1. part of it 2. offer fraud protection 3. advertise all over the site 4. make people think that if they don't use it they have no recourse (which is somewhat true, which strengthens my point) 6. they make customers dependent on them through the preceding means and 5. they are the easiest method by far to implement for sellers.

  • Bob

    It is indeed poor customer service, and possibly illegal, for Paypal to charge fees without telling anybody. And claiming that they are shafting their customers for the sake of their customers makes things worse.

    However, it doesn't matter whether Paypal charges people who pay, or people who receive funds. Either way, the amount of money received is less than the amount of money sent, and Paypal gets their cut. The important thing is, you need to come to an agreement with your customers, possibly charging them extra to pay you via Paypal.

    Sue: "I have no customers … I am a freelance writer."

    Not only are you being unnecessarily pedantic, but you are using an unusually narrow definition of customer. If you are a freelancer, contractor, or consultant, then your clients are your customers.

  • TC

    I have tried to quit using Pay-pal, but if you sell on E-Bay then thats all they will take, they cut out the other pay options like Money Orders and certified checks. This was just to make them more money. They are a bunch of rip off artist. I have gone to adding a flat 5% to anything I sell if the person pays with Pay-Pal just to cover the cost of the transfer. Then to do a increase and not do say anything about it," I for one didn't get any E-Mail from them" That has done it for me with using Pay-Pal. No More will I take a payment through them.

  • Chad

    Sorry to rain on the parade, but I actually did receive an e-mail from PayPal on this. The e-mail merely stated that they had made a change to their Terms of Service and told you where you could read it. The e-mail itself did not tell you of the change, but I went to the site like it said and clicked on the Terms of Service link at the top after I logged in and the changes were brought to my attention. I'm sorry to those who did not receive the e-mail or notice the link up top, but they did send them out.

  • gatherdust

    Re: the Steves, Jasons and JayDees of the world.

    I'm beginning to see online commenting materialize in real live in-person interactions with the townhall eabaggers and their lunacy – people who confuse rude, dismissive comments (that rationalize injustice at about the same time they display loopy paranoia about how dare the government take over the post office) for thoughtful, considerate contributions to a conversation.

    Paypal is a very large corporation that has almost cultivated a reputation for conducting itself in the most thoughtless ways and who has long made it difficult to resolve customer problems. Lots of small online sellers rely on Paypal because of the services it provides but the costs, when combined with others, make online commerce unattractive. It has long been a gripe that paypal factored a processing fee for every transaction in a premium account, regardless of the source of the funds sent. And it seems consistent with paypal that they've decided to add an additional revenue stream by charging those receiving funds in a personal account.

    In a saner world, there would be a consumer protection infrastructure that would make creatures like paypal more transparent and more accessible. It would also protect paypal from consumer abuse. Instead, paypal is seller of a services and at the same prosecutor, judge and jury when problems arise.

    So long as large corporations dominate the market, I think we should dispense references to the free market. Unless we're discussing the veracity of such things like bigfoot, wmd's in Iraq, and the tooth fairy.

  • Kevin

    It's ridiculous doing that for personal accounts. On a personal account you can't accept a credit card payment so there is no processing fees involved. The only thing people can send you are paypal account to paypal account transfers which are within Paypal's own system, that's 100% profit for them. Nothing but greed and greed is the reason we're in a recession now with 9% unemployment.

  • nicks

    Not surprised a bit, since ebay owns paypal and they are rapidly going down the tube. Ebay has continuously changed the rules of play over the past 3 years until they have pissed off almost everyone selling. The result, millions of sellers to go elsewhere or just stop selling on ebay.

    One great greedy ebay idea was to force everyone to use paypal so they could make even more, at the expense of the sellers. After years of abuse and continuous price increases to sellers, many sellers, me included, said enough is enough and have given up on Ebay. So long you greedy incompetents and take paypal down with you!

  • JD

    Are you serious? Paypal has been charging that same fee for years – this is not new! They've always taken a cut that is 2.9% plus 30 cents per transaction. The percentage is less if you do $3000 in the prior month. I've been using Paypal for years and this is the same fee structure they've always had. Unless I'm missing something (and if I am, you wrote a very poor story), then I don't understand why you are bringing up something that has been in place since at least 2003.

  • Justin Kownacki

    I cannot believe how many commenters here A) miss the facts in the article, B) miss the point of the article, and C) therefore personally attack the author.

    I know civil discourse online is forever dying, but at this rate, it may not be worth saving.

  • Nunya Bizniz

    Let's all calm down just a bit and look at the facts and details of this story. This blog post is actually a poorly written rephrasing of <a href="much" rel="nofollow">http://www.pcworld.com/article/169843/paypal_adds_fees_sneakily.html">much more informative blog post about the matter. The poster did link to the original blog post but, as usual, most people have either missed it or chosen to to read it.

    Whether or not Pay Pal effectively informed their customers of this policy change is certainly up for debate but, the policy is NOT the onerous ogre that it is being made out to be.

    The new policy is to charge for personal accounts receiving money. Previously only commercial accounts were charged but, now personal accounts are charged for receiving deposits.

    Purchases, such as those on eBay, remain free. There is no charge for sending money.

  • leannechan

    It is unfair. We should not be treated like this.We will pay attention on it continue.

  • Midnight

    JD, if you have a premier or business account then yes, this would all be normal for you. If you had a personal account you would suddenly be getting slammed with fees for previously free services. That's what you missed.

  • Shannon Hicks

    Actually, one other unannounced change is the sender gets the option of paying the fee, or letting the receiver pay the fee.

  • Dana

    Welcome to the world folks. While I think they dropped the ball by instituting new fees without advising their customers, I think the fees are justified for a service rendered. Why does everyone think everything should be free? PayPal provides a valuable service by allowing every day, non- commercial use of credit cards and doing it in a pretty secure way. I have a Premium account so that my customers that need to can pay via credit card. Have you priced a merchant account lately? You will pay $30-$40 a month just for the privilege of taking credit cards, whether you use it or not. PayPal's fees are pretty much in line with most merchant account fees without the monthly fee.

  • Nick Chhan

    This is absurd, and to even spin it as a 'an improvement to the user experience' is misleading and condescending. PayPal, you lost my business.

  • maggie van ostrand

    I've been paying vendors and others for a long time via PayPal. I loved them, until I read your article.
    Thanks for telling me about these unannounced (hidden) fees.

    Perhaps PayPal has inadvertently done a huge favor for the U.S. Postal Service (which has been in financial straits latel) because now, if PayPal customers like me get mad enough, they'll revert to paying by mail.

    Arrrggghhh

  • Jeff

    I agree with JD. This is not anything new. I've been paying these same fees since I started using Paypal years ago. I don't know where the information on this article came from but it seems inaccurate or possibly Sue hadn't noticed the fees until now.

    It isn't ridiculous for Paypal to be charging fees either. They have a network to run, servers to keep up, databases to maintain, employees to pay, bandwith, and so on and so forth. How do you propose they pay for that? Generous donation? A service like this isn't free. It costs a lot of money to run.

    As its been stated, Paypal is linked to eBay which explains the fee structure. Payment recieved are in the "seller" category who are responsible for the fees. The system is set up for the consumer.If the buyer had to pay all the fees that would suppress transactions.

    I understand you don't agree with it, but unfortunately, you are on the business side of the transaction. You do know you can write these fees off, right?

  • Jay

    After getting screwed over myself I called paypal and they told me you can still send money for free you just have to select the personal tab when sending money.
    Paypal is fucking two-faced.

  • Richard

    Remember: If you are using PayPal as a business account the fees are deductible.

  • dave

    I dont berate you for being upset about the fees increasing without notice. That IS inexcusable.

    However, your complaint about paying taking $50 a month from your hard earned income is absurd. Try opening a merchant account with VISA and see how much that runs you. I guarantee you it is much more than PayPal.

  • Sean

    I always found it interesting how now that ebay and paypal are the same thing, not only do they both charge you, but ebay is taking big steps to prevent you from paying with anything but paypal, because its "secure". Honestly, as a seller on a non-ebay auction site, if my customer wants to pay with paypal instead of a personal check or money order I add paypal's fee into their bill. I dont eat the cost just because someone feels like paying a couple bucks to have someone hand me their money.

  • Josh

    I am signed up to receive an email when there are *any* changes to the terms of service of fees to Paypal in their options and I received no email at all. Paypal is a shady company that cannot be trusted, I will be looking to use another option whenever I can from now on.

  • Edmund Winston

    This is the first I've heard of these Fees.

    I already quit using eBay because of the ridiculous policy changes, and now I have to stop using paypal.

    All of us disgruntled customers should go out and create a competing website. For both eBay and Paypal. A place where feedback goes both ways, neutral means neutral, and they don't add secret fees without telling anyone.

    That's after we file the class-action lawsuit, of course.

  • Alan

    Paypal and eBay are run by fools, which is why you have seen so many idiotic decisions coming from them.This isn't simply a bad decision. It's just the latest bad decision. I've never seen a company with a greater desire to steer itself towards the iceberg in my entire life.

  • Anangry Someone

    Paypal is a hotbed for scammers anyways, all you have to do is create a paypal that's not tied to the e-mail you communicate with vendors with, and you can simply claim an unauthorized access to get your money back for your transactions.

    I've seen people lose thousands of dollars in payment because of this, and Paypal doesn't do ANYTHING to stop it.

  • americanstudent

    Welcome to the new world, where major companies do what they want, when they want!

  • http://meneame.net/story/paypal-ha-anadido-nuevas-tasas-sin-avisar-eng Paypal ha añadido nuevas tasas sin avisar [ENG]

    El mes pasado Paypal ha empezado a aplicar nuevas tasas a sus clientes de cuentas personales sin notificarlo en ningún momento. Las nuevas tasas aplican a los pagos marcados como "mercancías" o "Servicios". Dichos pagos fueron hasta ahora gratis, pero ahora se cobrará una cuota de aproximadamente el 2,9% más 30 céntimos. Al ser preguntados, Paypal alegó que las nuevas tasas se habían notificado por email, y el blog de Paypal, lo cual resultó ser falso.

  • Bob

    For these and other reasons, I closed my PayPal account(s) not long ago. Prefer other ways to do business.

  • Billy

    Without getting into my story, I can assure you that paypal's crimes go well beyond these fees. Just check out some of the horror stories on http://www.paypalsucks.com. They are all true- mine are even worse.

  • Nathan

    As a freelance web developer I receive nearly all of my payments via paypal. Paypal currently takes about $150 per month out of my paychecks. Inexcusable that they should up the fees without notifying me. Very unprofessional and really disheartening for us serious users.

  • Jake

    It's all about competition and they probably need this extra % of money due to you know what..

  • ben

    Paypal is Ebay. Tha is what ebay is doing to further screw up its business model. They choke their seller base to death with fees already, and its not enough, so to continue their beat down they've added more fees. The CEO and the whole board needs to be replaced immediately if ebay/paypal wants to save itself. Crying how we lost customer and seller base and increasing fees dont go well together as a solution.

  • HHDJr

    Everyone seems to forget one BIG thing. No one FORCES you to use ebay or screwpal. Anyone whose been around a while knows they screw sellers coming and going with fees. I refuse to accept screwpal in what little I sell on ebay these days. Vote with your keyboard and STOP sending business their way. Easy to fix, hard to remember you dont owe them your business………..

  • Benji

    That's ridiculous. I shouldn't be charged to make a payment. Where I live, the sales tax is already 10%; now add 2.9% more, plus a .30 fee and the price of something is an additional 15%.

    I'm sure Google Checkout is happy they're doing this, which is the only payment service I'll be using now. I have to disagree with you're remark that the payor should be charged a fee, and not the receiver of the funds. As the merchant, you should eat the cost of having a 3rd party handle the receipt of your funds; as someone paying the funds, well, that shouldn't be a charge I incur.

  • Dave

    Paypal are thieves, pure and simple, no matter which way you spin it. Unfortunately, for many people they are also the only safe? (arguable I guess) way to send money on line and they know that.

  • drock

    wow Sue, your ignorance boggles my mind.
    Add the fees to your overhead % and charge for them.

    I agree that paypal should notify people about this change.

  • OMV

    Craigslist baby, Free and no crap fee's

  • Charlie

    I don't really understand why you're mad at the fees. PayPal is actually pretty affordable when it comes to fees, especially the alternatives. When you use a credit card in a store or restaurant those merchants are charged a fee. There's no reason that you shouldn't be charged a fee for using a service which allows you to accept electronic payments, freelance or not. Speaking for myself, I accept donations to keep my site running, PayPal makes a decent amount of money off of me each month as well. Big deal? It's the price I pay for accepting payments this way, and it's a reasonable price at that. You're incredibly naive if you believe the customer should be charged for paying you.

    The only thing that bothers me is they didn't announce these changes. Everything else is fine.

  • distortedbsd

    There are alternatives if someone disagrees with paypal fees. For example moneybookers (http://www.moneybookers.com/). They have almost the same features, and they are available in more countries. They even added the possibility to use it on ebay as a seller.

  • John

    This is crazy..I will cancel my small account and not use them anymore..
    I use Google Pay anyway…NO Fees

  • John S

    Well, I guess since Ebay is doing so bad they must make up for it somehow. I am not one to complain about some fee's for providing a service. Obviously costs for those services will go up. But I never received any notice and that is not right. What is up with companies quietly implementing these fee's without notice? Even my bank notifies me of pending changes several times before they take effect.
    Maybe its time for me to drop PayPal.

  • Sue

    To those who contributed well thought out comments, thank you for sharing your thoughts. Those who felt the need to flame me, insult my writing or just be rude, really there must be more constructive ways to spend one's time.

    To clarify, the article is talking about a NEW fee introduced by Paypal. If you have a BUSINESS or PREMIUM account it doesn't affect you. However those with PERSONAL accounts will now find they are being charged a fee for transfers. These transfers were previously free.

    To the commenter who said my clients are indeed my customers, you are correct. The point I tried to make is that I am not a merchant/seller/retailer, just a simple freelancer. I do sell on Ebay and I agree that sellers should build the cost of Paypal fees into their selling price. The only auctions I do on Ebay are fundraising ones for a specific charity so I choose to cover the fees myself.

    Thanks again to those who have contributed intelligent, well thought out responses to this post!

  • http://www.dailydu.com/story/51 Paypal adds new fees with no notice

    Last month Paypal quietly began charging new fees to its customers who have personal accounts without actually notifying them of the change. The new fees apply to payments marked as “Goods” or “Services.” Such payments were previously free but will now be charged a fee of about 2.9% plus 30 cents. When confronted, Paypal claimed the new fees had been announced in email, news articles, and Paypal’s own blog. However that turned out to be untrue.

  • http://www.techforum.ws/story.php?id=255 Paypal adds new fees with no notice

    Paypal quietly began charging new fees to its customers without actually notifying them of the change.
    “We didn’t want to make a huge formal communication out of this pricing change, because we weren’t really adding any fees, and we were hoping it would be a more useful experience for people,” explained PayPal PR manager Charlotte Hill.