PayPal has announced new rule that will make refunds and returns more expensive for ecommerce sellers that use the popular payment service.
- PayPal takes a flat 30 cents plus 2.9% of the total transaction amount as its fee for processing the payment.
- As it stands before May 7, 2019, if that transaction is refunded, the merchant gets back all the but 30 cents, which PayPal kept.
- However, effective May 7, PayPal will no longer refund the 2.9% portion of the transaction either, the company said in an update.
- This issue will become especially problematic for merchants who issue refunds.
- Whereas the 30 cents was relatively easy to absorb as a “cost of doing business,” having to lose 2.9% in addition to deal with the hassle of a return and refund could force stores to rethink their return and refund policies.
- If you aren’t prepared to absorb the 2.9% fee on refunded transactions, then you’ll want to stop taking PayPal on your Shopify store before May 7.
- Shopify store owners should also, if necessary, update their return and refund policies before May 7.