PAYPAL FEE HIKE

[lurehouse]

I missed the first email from Paypal about a rise in fees and just received the 2nd notiice today,do i reasd right and are they putting up fees 8% overall.What another nail in the coffin for small sellers?...........................

[englishrosegardens]

They already get more money because of inflation. I sell for 30% more than I did a couple of years ago, so paypal is getting 30% more than they used to.

[digital*ghost]

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@englishrosegardens wrote:
They already get more money because of inflation. I sell for 30% more than I did a couple of years ago, so paypal is getting 30% more than they used to.

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Except not everything rises in price or appreciates in value over time - many do quite the opposite, and while that has always been the case, there are some things which were novelties when PayPal was growing (eg auctions here on eBay) that rarely acheive the kinds of prices they once did. Inflation also doesn't cover new costs. 

(And before anyone accuses me of it....again , no, I'm not "defending PayPal" and/or fee increases just because I point out the inflation theory doesn't necessarily apply just because some items cost more now than they did a few years ago). 

[englishrosegardens]

Yes, I was aware that not everything has gone up in price, but a LOT of things have. I don't think they're missing out on much, especially as they "encourage" buyers to pay after every purchase!

Edit:  They're so huge now that I'm sure that they save some money through economies of scale. 

[sampurr]

That is rubbish.

As inflation happens, they naturally get more in turnover because of the increase in money due to inflation.

Their overall take rises as money decreases in value.

No need to raise their rates at all, for a $10 sale, their overall fees are now more than 4% which is disgisting for small sellers.

[digital*ghost]

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@englishrosegardens wrote:

 I don't think they're missing out on much, 

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Probably not, none of us actually know for sure, we can only make assumptions about PayPal's operating costs, but I think it pays to be aware they're assumptions, with little to no factual evidence to support them. 

[englishrosegardens]

I "assume" they're doing okay, based on the fact that they split off from ebay because ebay was struggling and dragging paypal down. Paypal were (supposedly) reported to be doing very much okay.

They'd be making less on the short term money market now that interest rates are lower, but a lot of small sellers would leave their funds in their account for a while so it's there when they want to buy something.

They've got their fingers in so many pies now that there must be more and more money going through them as more and more places accept paypal.

[digital*ghost]

I'm not disputing the fact that PayPal certainly seem to be doing well for themselves. The only thing I was tyring to say was that inflation doesn't necessarily take care of everything for a company who takes a percentage of other people's sales / money. 

I do admit some bias outside of that point, in that I have difficulty attributing a 0.2% increase in fees (for some) to corporate greed, but I'd also like to point out that I have no difficulty attributing many of eBay's fee increases to corporate greed...yet I have tried to make exactly the same point in the past where eBay's concerned when someone says they don't need to increase fees because inflation should take care of it.

[englishrosegardens]

I have no problem with what you're saying about percentages.  I was just pointing out a few things that might balance out increased expenses, at least in paypal's case.

I often wonder how paypal calculate their conversion rate for overseas purchases because I always used to add 2% to the AU dollar amount showing to get the actual amount I paid, but these days it's more like 4% that I have to add.  That means paypal's conversion rate is VERY much in their favour.  If they're collecting 2% more than they used to (not as a fee but just as a very favourable conversion amount), then they're much better off than they were.

I won't get into a discussion about ebay's fees, except to say that I do prefer to pay higher selling fees and no listing fees.

[digital*ghost]

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@englishrosegardens wrote:

I often wonder how paypal calculate their conversion rate for overseas purchases because I always used to add 2% to the AU dollar amount showing to get the actual amount I paid, but these days it's more like 4% that I have to add.  That means paypal's conversion rate is VERY much in their favour.  If they're collecting 2% more than they used to (not as a fee but just as a very favourable conversion amount), then they're much better off than they were.

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Yes, that's definitely been their biggest hike in recent years, and they not only charge the buyer a conversion fee when they pay for an international purchase, but they also charge the seller a higher percentage (than for a domestic transaction) for receiving it, so they do quite nicely out of international transactions.

[trailer-board-paradise]

I don't understand the link to inflation. As I understand the 2.6% is a commission indexed to the value (or price) of a good. It is the good which is affected by inflation. Therefore when a good increases in price because of say inflation then the commission will increase even if the percentage remains static.

If inflation were also applied to the commission as well as to the value of the good then there would be a time when the commission itself would be more than the value of the good sold.

While inflation could be used as a reason to increase the commission such an increase could well be interpreted as an early sign of hyper-inflation of the economy.