PayPal Surcharge

Preferences aside, PayPal runs the disclaimer because it just happens to be illegal. Whether anyone likes it or not is beside the point. Of course PayPal doesn't care one bit what people do as long as they use their services and someone pays whatever fees they, or the credit card companies, charge. They make folks agree not to pass along the fee so that they can say to any authorities who may (or may not) investigate their compliance with the law, "hey, we told them it was illegal, we told them not to do it, and they agreed -- don't look at us." This will likely serve as enough of a complication to diffuse any interest in enforcement against PayPal, and there is certainly no political will, advantage, or practical feasability in enforcing it against individual users (...yet, with more high-volume or institutional users, I guarantee this will change).

Consequently, whether or not folks insist on passing this fee along to purchasers is a question of nothing more and nothing less than their own integrity. In fairness, most individual sellers likley don't realize what is at issue. Notwithstanding, no one who insists on passing a surcharge for a service they have selected for their own convenience is someone I would elect to do business with -- and the fact that they do so illegally and in clear breach of an express covenant only drives it home further. I don't think it's worth getting particularly exercised over, just not transactions I need to be a part of. As in all things, the choice is yours.

I've never actually used PayPal, so my info's a bit shaky. It sounds reasonable that the reason for their "no surcharge" policy is because of certain credit card laws (and, undoubtedly, their iron-clad agreements with the credit card companies themselves). For example, the California Civil Code:

1748.1. (a) No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means. A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.
(b) Any retailer who willfully violates this section by imposing a surcharge on a cardholder who elects to use a credit card and who fails to pay that amount to the cardholder within 30 days of a written demand by the cardholder of the retailer by certified mail, shall be liable to the cardholder for three times the amount at which actual damages are assessed. The cardholder shall also be entitled to recover reasonable attorney's fees and costs incurred in the action.
A cause of action under this section may be brought in small claims court, if it does not exceed the jurisdiction of that court, or in any other appropriate court.

Of course, there's more than one way to submit payment through PalPal, just as there's also more than one way to skin a cat ("add 3% for credit" v. "3% discount for cash"). That said, the way people now do it would seem to be proscribed by law and potentially exposes them to trebel damages -- at least for credit card transaction in CA (to say nothing of their agreement with PayPal). PayPal's unenforced (and likely unenforceable) agreement with users is pure CYA, likely more from the credit card companies than The Man. The credit card industry is closely watched and heavily regulated -- and if anyone has any doubt about how serious it is, just have a look at the $800 million verdict that came down from a CA court last month against Visa and Master Card for a "hidden" 1% surcharge for foreign currency transactions. Different law and different issues, but not so far removed....

All that aside, PayPal offers the market a valuable alternative. The more people know about how it works and how best to use it, the more valuable it will become. To me, this thread has been very valuable. As a buyer, I've always had a strong aversion to someone demanding that I incur additional costs for their convenience and protection, not my own, and I generally avoid making deals where that is required. Sometimes, though, it makes sense. And when it's to both parties benefit, at the least, seems you should split the cost. The more informed the market, the better it works. I've definitely learned something, cheers to that.