PayPal reinstates controversial policy of pocketing fees from refunds

PayPal is restoring a controversial policy on its handling of fees in case of refund. Beginning next month, PayPal will begin pocketing the initial 2.9 percent commissions that sellers will lose during a transaction, even when the seller reimburses a customer in full.

The company initially implemented this policy in April, but the seller's reaction to PayPal alleging that the commission rate led him to reverse course. Now, PayPal says it is updating its policy forever, citing its "cost structure" and claiming that the refunds approach is in line with industry practice. Sellers agree again with the change, and some claim that, in fact, it is not the case that the online payment processing industry handles refunds like this.

“Earlier this year, PayPal updated its User Agreement to change our refund policy . In accordance with industry practice, and in accordance with our updated policy, we do not charge fees to process refunds, but when a seller reimburses a transaction to a buyer, the originally paid rates will not be returned to the seller. The policy change will take effect from October 11, 2019, ”said a spokesman for PayPal The Verge .

“We believe that this policy change is in line with the practice of the industry. We know that companies depend on us and the decision to update our policy was not taken lightly. The policy change allows us to align more closely with our cost structure, with the policies of our payment partners and with industry practice, ”the spokesman added. "We only adjust our policies when we trust that the changes are fair and are aligned with the value that our services provide to companies."

PayPal is one of the most used financial services and online payment companies on the planet. Originally co-founded by Silicon Valley titans such as Elon Musk and Peter Thiel, the company had a successful initial public offering in 2002 and was bought that same year by eBay for $ 1.5 billion, at that time one of the biggest acquisitions of the technology industry of history Ebay eventually split PayPal as a separate public entity in 2015, and the company has remained an important player in the online payment sector. In addition to providing the financial infrastructure and payment process for millions of merchants and websites, PayPal also owns Braintree, the parent company of Vemmo, the peer payment application, and an important player in mobile payment processing.

But PayPal seems to be cutting costs with its new rate policy, just as Stripe, its main competitor, is becoming one of the most valuable private technology companies in the industry. PayPal is still much larger in valuation and market share than Stripe, but the San Francisco-based company has grown considerably in the last decade and is now a major challenge for PayPal along with the digital payment arm of Square and Amazon.