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Merchant fees: PayPal, Credit Cards, and you
12 years ago
Click here for 55 awesome artists, and links to their favorite artists! (and 30 more from 2013) (and 32 more from 2014)Back this giant monster Game, Kaiju Combat, and you can play Aram's sister-in-spirit, DragonLotus! EDIT: PayPal has different policies in different countries. What follows regards the US policy
(note: in countries like Germany, the passing of the PayPal fee from seller to customer is permitted, so be careful of which country you are buying from before complaining about the fees).
In a recent thread elsewhere, I described to a friend how merchants cannot charge you extra for using a credit card. This was a rule imposed by the credit card companies, and by PayPal, under some federal regulation standard whatsis. PayPal used to reference this whatsis in their User Agreement, but now they just generally state that it's disallowed.
Section 4.1 of PayPal's user agreement says:
4.1 Receiving Personal Payments. If you are selling goods or services, you may not ask the buyer to send you a Personal Payment for the purchase. If you do so, PayPal may remove your ability to accept Personal Payments.
And under 4.5:
4.5 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.
The rule is reiterated under section 8:
For Purchase Payments, the recipient of the payment will always pay the Fee.
Now, here's something interesting. PayPal's AUP hid under the umbrella of Credit Card regulation as the reason why they prohibit the forwarding of charges. But today I couldn't find any mention of that regulation in their rules. Then I found out fom this recent article it says:
Charging customers extra for credit card transactions became legal in January 2013 as a result of a federal court case that challenged Visa and MasterCard's right to forbid such surcharges.
So that's why PayPal no longer ties itself in with the Credit Card companies when it comes to forbidding surcharges. And that's true now, but some states have laws against it, so the national and international merchants have been slow to adopt this surcharge method. Visa's site covers it well:
Link updated 12/10/2015: https://usa.visa.com/support/consum.....arge-fees.html
Link updated 2/4/2017: https://usa.visa.com/support/consum.....a-rules.html#3
Here's a current list of the states (as indicated on Visa's site) where you still can't charge a surcharge for credit cards:
California
Colorado
Connecticut
Florida
Kansas
Maine
Massachusetts
New York
Oklahoma
Texas
Added 7/11/2014: Utah
Removed 12/10/2015: Utah
(note: in countries like Germany, the passing of the PayPal fee from seller to customer is permitted, so be careful of which country you are buying from before complaining about the fees).
In a recent thread elsewhere, I described to a friend how merchants cannot charge you extra for using a credit card. This was a rule imposed by the credit card companies, and by PayPal, under some federal regulation standard whatsis. PayPal used to reference this whatsis in their User Agreement, but now they just generally state that it's disallowed.
Section 4.1 of PayPal's user agreement says:
4.1 Receiving Personal Payments. If you are selling goods or services, you may not ask the buyer to send you a Personal Payment for the purchase. If you do so, PayPal may remove your ability to accept Personal Payments.
And under 4.5:
4.5 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.
The rule is reiterated under section 8:
For Purchase Payments, the recipient of the payment will always pay the Fee.
Now, here's something interesting. PayPal's AUP hid under the umbrella of Credit Card regulation as the reason why they prohibit the forwarding of charges. But today I couldn't find any mention of that regulation in their rules. Then I found out fom this recent article it says:
Charging customers extra for credit card transactions became legal in January 2013 as a result of a federal court case that challenged Visa and MasterCard's right to forbid such surcharges.
So that's why PayPal no longer ties itself in with the Credit Card companies when it comes to forbidding surcharges. And that's true now, but some states have laws against it, so the national and international merchants have been slow to adopt this surcharge method. Visa's site covers it well:
Link updated 2/4/2017: https://usa.visa.com/support/consum.....a-rules.html#3
Here's a current list of the states (as indicated on Visa's site) where you still can't charge a surcharge for credit cards:
California
Colorado
Connecticut
Florida
Kansas
Maine
Massachusetts
New York
Oklahoma
Texas
Added 7/11/2014: Utah
Removed 12/10/2015: Utah
All in all, it is probably best if the unit price incorporates the transaction fees, especially if you expect most of your transactions will be through PayPal or credit cards. If they pay with cash, you make some extras. If they buy a lot, you also make some extras. Your pricing structure will be straightforward to the customers and less controversial in front of regulators and the court.
Working there opened my eyes to what a racket credit cards really are, particularly the costs that the vendor must bear in order to be able to accept credit cards. It's appalling, really.