Paypal's Transaction Fee Sneakiness

Paypal is being sneaky about their website payments pro feature. Here are a 2 things you should know:

1. Cross Border fees (Merchants are slapped with an additional 1% commission on every transaction)

You can NOT see it here:

or here:
or in the FAQ:
and its not part of the PDF datasheet either.

You can only see this if you click the link for International Sales.

Why not change the wording from “Transaction Fees” to “Domestic Transaction Fees” and be a little more upfront about it.

2. You actually need to apply for the rate in order to get it.

So, you had a good month? Finally you exceeded that 3K monthly paypal mark… hoping to make a couple extra bucks now, cause ur fees are lower, right? One may assume that in the year 2009 a FINANCIAL organization running a high tech website with multi million users worldwide, should be capable of conducting an automatic monthly sales check and shift the merchant rates accordingly.

No, no, no …how could Paypal possibly determine your monthly sales and adjust the rate. Let’s rather send merchants on a wild link chase and have them figure out how to qualify for a better rate. What if someone figures this out late… let’s say u been selling 10K+ / mo via Paypal for the past couple months but you never actually bothered to check your current paypal rates?

You may wonder if you qualify for reimbursement.

Weeeeeeell, says Paypal, that’s your problem. You should have read EVERY SINGLE little thing on our site. Nope, you are not getting anything back. These are our well deserved millions? billions?

Not just payments pro, standard paypal is the same. We were selling for over a year before we spotted you had to apply for the reduced rate. Cross border fees affect us heavily as most of our customers are in different countries, however I thought it was a 0.5% difference?

Also when dealing with foreign currency, be aware that Paypal use the type of poor exchange rates you’d expect to see in travel agents, so this effectively adds further to the commission they take.

And unfortunately for me and many other small businesses, most merchant services are too expensive (in comparison to our income as a start-up) to be worth moving away from PayPal. And for me, PayPal offers the best API for easy integration with the needs of my website so I feel even less willing to move away from them then before.

I was using for a while and recall being charged a 2.1% or 2.2% commission + $.25 per transaction. I don’t think I was being charged more for international transactions. I am somewhat considering switching back as that additional 1% for cross border fees makes Paypal now a less affordable option.

Sorry, I fail to see the sneakiness.

  1. If you go to, and click fees in the bottom menu, there are two prominent links to “Fees for cross border payments” right there.

  2. It’s not like it’s a major inconvenience to apply for merchant rates. You click a button and you’re done, you’re set for the life of your account. Click on fees while in your account, click on the “1.9 to 2.9%” or whatever link, and you see the “To qualify for Merchant Rates, a seller must complete a one-time application and meet the Merchant Rate Criteria.” message.

Conducting an automatic monthly sales check, as you suggest, would probably cost tens of thousands of dollars a month to do, at least. There are billions and billions of transactions to aggregate to figure that out. It saves them a lot of money to only have to check the few accounts that signed up for merchant rates, which is the right thing to do for a publicly traded company whose executives must maximize shareholder value (profits).

I will try one more time.

On this page:

It says on top, right hand side.

Transaction fees
1.9% to 2.9% + $0.30 USD†


It has to be changed to either:
1.9% to 3.9%

or renamed to:

DOMESTIC Transaction Fees

Why? Simple! Cross border fees are also transaction fees.

Believe it or not …a lot of people sign-up and do NOT know that there is an additional 1% charged for international sales. They see 1.9 - 2.9% + $0.30 USD and don’t bother reading the small print. Why does there have to be a small print?

Another thing I like to add here is that the single criteria paypal uses to determine if the cross border fee is applied or not is the billing address. I was doing some test transactions on a cart and accidentally used a UK address during checking out with my US Paypal Debit card…still got charged cross border fees.

There’s a reason for the † and the words “transaction fees” being a link. That page is an overview, brevity is the purpose. The cross border fees aren’t even fine print, they’re normal size print given in an easy-to-understand table on an easy-to-find page, not hidden in the legal agreements.

PayPal is much more transparent about their fees than the average MAP or bank.

Dan, these queries are being run anyway. What makes you think that they don’t have this info already for their own financial reports and forecasts.

I think even their phone reps have your monthly sales volume right in front of them.

Paypal profits from cross border fee unawareness. That’s the whole point. How about giving credit back to the merchants who never knew that additional steps were required to get a better rate. What would be so horrible about that?

Yeah, exactly!
When you see the rates …you go JESUS CHRIST!!! :slight_smile:

After the gateway fees, downgrade fees, cross border fees, batch fees, processing fees, etc… PayPal comes out cheaper than charging a credit card much of the time for me. At merchant rate at least, which I qualify for, having pressed the before mentioned button a few years ago. I paid over $7,000 in PayPal fees last year… I do pay attention to those things. :slight_smile:

I’m much more curious about the “INTL SERVICE FEE” that shows up on my personal bank account all the time. The local bank will never tell me exactly what that’s for, how it’s computed, or why I pay it when I buy from US companies at times.

Paypal is really starting to piss me off lately. I’ve had so many issues with them. I have completely lost faith in their company.

Did you signup with Paypal in 2000 or earlier?

I have this client who is getting a 2% “grandfather” rate by default. He does about 1/3 of the volume you do but there were some issues having him setup with Paypal WPP while still keeping his 2% rate.

Hey Jericho,
My sympathies. Welcome to Sitepoint!! :slight_smile:

June 2000. I didn’t get grandfathered into anything, though. I was initially at 2.9%, and when I started processing more than $3000 a month, clicked the link to apply for merchant status and get 2.2%.

At some point between 2000 and now, they added that middle tier, 2.5% for $3000-10000/month processing, which I was downgraded to for a while until I started processing over $10,000/month. It automatically put me back to 2.2% then.

I only use the standard service, so the transaction fee is the only fee I pay.

I am glad to hear that you are/were not among the affected.

You may find this interesting.

The banks around here that I checked with have a similar fee structure to Paypal (including almost exactly the same percentages for everything) except that the banks have an additional $30 charge for having the merchant account and don’t offer API integration into the back end. That makes Paypal extremely competitive.

No-one forces you to use Paypal - if you don’t like their rates or service then move on and use another processor :slight_smile:

In the overall scheme of things Paypal are still very competitive in a crowded market place.

Before I used PayPal I had a regular merchant account. In addition to the percentage of every transaction, there were fees up the wazoo, regardless of whether or not I did any business that month. I haven’t found a better solution that PayPal. I do quite a bit of International business and I keep an eye on exchange rates. I haven’t seen that the exchange rates on PayPal differ much from what is posted day to day and my account, so far, hasn’t been affected by cross-border fees to the extent of the monthly fees imposed by the regular merchant account (which I no longer have!)

I ran away fast from paypal after using them for a short while, they were awful!! Their customer service is terrible!! I use worldpay now and they are fantastic. They make paypal look like rank amateurs.

Oh and hey, if you ever get someone buying something on your site using stolen credit cards or anything, don’t expect much sympathy or help from them, their line seems to be “it’s your fault”. Oh, cheers…