PayPal Surcharge

MEZMO: What law is this you say it is against to charge 3%-- would you cite a reference of some sort so we can go look at it, please? I've never heard of such a thing and I'm pretty curious about it now. Is it part of the federal code dealing with banking or ???

CADMANIAC: I'm having a hard time hearing you, since you are way up there on that high horse. Paypal said in the beginning, when I originally agreed to their TOS, that they'd never charge a fee, because they made their money on interest on your funds while they held them preparing for transfers. Any of you other 'goners remember the explanation they had up on their site about how Paypal would work and not cost us $$? They lied, then they changed the rules, and the bottom line is, if a deal does or does not include the 3%, that's the business of exactly 2 people, the buyer and the seller, your self-righteous platitudes notwithstanding. If there is some obscure law about a surcharge being illegal, I'd love to see it for the curiousity value, but they can just try to get me.

frankly

I tend not to user paypal to settle transaction. The company simply charge too much on seller. I post and item, even have 3% funding added from buyer, I still have to lose another 3% from exchange rate difference.

Its end up to prepare 6% if getting money from paypal for my selling items. whats the point?

Escrow acts much better on this, though it takes longer time to have money received.

I've done a lot of trading here on AudiogoN, either as a buyer or as a seller. Regarding Paypal as a method of payment, I'd like to stress to all those who think that the seller should eat this charge that it is much more advantageous if you're a buyer than if you're a seller. As a seller, you still have to wait 4-6 business days before you get the money into your bank account. That is about the same time a MO takes to make it to me. So as a seller being paid via Paypal I have to ship the items but still have to wait about a week before I have access to the funds. But as a buyer, it considerably speeds up the transaction. Moreover, as someone already said, it avoids the buyer the trouble of getting a MO (which is not free) and having to mail it (not free either). I don't mind paying the 3% fee when I'm buying stuff and decides to use Paypal for payment.

To repeat..All credit card transactions have a fee, usually around +/-3%. The store pays it (deducted from proceeds). Has nothing to do with Paypal. If you accept credit card payments, you are no different than a store.

If you were to try to set up your own credit card account directly with VISA and Mastercard, the fixed cost alone would be a lot more than just paying PayPal.

PayPal has created a way for all of us to get the benefits of credit cards on very small transactions, with no up front costs. What is the problem here?

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.