THE TAG BLOG
Managing returns due to refund fee changes by Paypal
NOVEMBER 4 2019
HIGHER FEES COMING FOR ONLINE SELLERS
When PayPal first announced a refund policy change in April 2019, whereby they would not refund online sellers their original transaction fees in the case of a return, forums lit up with outraged sellers. Initially, it seemed that they were reversing this highly unpopular change, but on October 11, 2019, the new PayPal refund policy went into effect. Sellers accepting PayPal are out the 2.9% plus 30-cent fee on their sale even if they issue a full refund to the customer.
PayPal sent out the following refund fee policy update:
'We're changing how we treat refunds. If you refund (partially or fully) a transaction to a buyer or a donation to a donor, there are no fees to make the refund, but the fees you originally paid as the seller will not be returned to you.'
For example, the sale of a $1,000 dress would cost the seller $29.30 in PayPal fees. In the case of a full refund to the buyer prior to October 11, the seller received back $29.00; a return today would result in zero dollars returned to the seller. Reselling the same dress would incur fees a second time, cutting into already slim margins.
RETURN FRAUD EXPOSES SELLERS TO UNRECOVERABLE PAYPAL REFUND FEES
Preventing items sold online from going out for a night on the town and being returned. Shown here is the Classic Loop Pack - 22mm.
Sellers bear the cost of payment processing fees multiple times for the same item
On forums, sellers are debating the need to reassess their return policies as this unexpected fee hike just made accepting returns more expensive. Unfortunately, there will always be instances of buyers returning items for various reasons. However, what if the mere presence of a 360 ID Tag had the effect of deterring a dishonest buyer from engaging in brazen acts of return fraud like wear and return, wardrobing, or counterfeit product switches?
Current 360 ID Tag users are reporting lower rates of returns overall, and as a bonus, they have successfully identified customers who are serial returners. For those businesses accepting PayPal, this is a welcomed benefit and helps them manage fraudulent returns.
THE SOLUTION IS AN ANTI-RETURN FRAUD TAG
Typically costing less than 50-cents per item, the 360 ID Tag solution is well worth the investment, protecting you from unscrupulous buyers and unreasonable merchant return fees due to e-commerce return fraud.
Ship your item with a 360 ID Tag attached. Customers can still try the item on with the return tag attached.
Let us know in the comments below how this PayPal refund policy change has impacted your business
Want to talk return tags, have questions, or need some advice? Add a comment below, or send me a message at email@example.com, and I’ll be happy to help you out.
CHELSEA DUHS - FOUNDER 360 ID TAG
Choose a 360 ID Tag Pack to suit your business
We offer 4 different 360 ID Tag packs with varying combinations of return tag material and tamper-evident security seals, or you can build your own combination. Have a look at the 360 ID Tag products and choose the return fraud solution that suits the types of products you sell online.
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