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 policy change in April 2019, whereby sellers would not be refunded their transaction fees in the case of a return, online forums lit up with outraged sellers. Initially it seemed that PayPal was reversing this highly unpopular change, but on October 11 the new refund policy went into effect. Sellers accepting PayPal are out the 2.9% plus 30-cent fee on their sale even if a full refund is later given to the customer.

PayPal sent out the following 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 would be returned $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 FEES

Shoe return tag prevent counterfeit product switches wardrobing 360 ID Tag

Preventing items sold online going out for a night on the town and being returned. Shown here is the Classic Loop 360 ID Tag .

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, but 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 and as a bonus they have been able to successfully identify customers who are serial returners. For those businesses accepting PayPal this is a welcomed benefit and is helping them in managing returns.

THE SOLUTION IS FOUND IN THE RETURN 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 fees.

Ship your item with a 360 ID Tag attached. Customers can still try the item on with the return tag attached.

Let us know how your business has been impacted by Paypal's policy change.

WRITTEN BY CHELSEA DUHS

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 one that suits the types of products that you sell online.

LATEST ARTICLES

The rise of fraudulent returns and how to prevent them

Managing online returns in the e-commerce world is essential with daily shipping of packages expected to rise 50% by 2026 to 100M. With 30% of purchases returned how are you going to deter and manage those that are fraudulent returns? Think wear and return, wardrobing, snap and send back and fake product switches.

What is wardrobing?

The act of wardrobing; where shoppers buy an item, to use or wear and return for a full refund; is a form of return fraud or abuse and is on the rise, particularly for e-commerce stores. By adding a return tag to items sold online, businesses can deter this brazen consumer behavior. See how a 360 ID Tag can work for your store.