PayPal is making it more expensive to issue refunds

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.
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