Thread: Paypal: High charges so add a premium for taking it?

Paypal are talking a large part of our margin. And my experience of PP for chargebacks is not good. We rather not take Paypal but have to accept it, its bias towards buyers away from the seller beyond the rules of banking makes it desirable for buyers so they want it. Is it possible, because of the added risks and charges, where customer selects PP as payment, to add a premium, not otherwise added when payment is made by standrad cards payment. Or add in something else as a bonus not to use PP.

And with an explanation of that premium to the cust? Much like some travel sites do for any card payments now.

Or am I into custom development for this?

You'd be in for custom development on this. One thing you should be prepared for as well is customers simply leaving the site and shopping somewhere else. Depending on your industry, how critical accepting PayPal is will vary widely, and finding accurate data will be difficult. PayPal will tell you it will cost 30% of sales, and the credit card companies will say it has zero impact. I would suspect that impact would be towards the very low end of the spectrum for most sites, unless you are in an industry where customers A) don't trust you enough to enter their card information, or B) deals heavily with auction items, or C) virtual game items, or other intangibles of questionable origin.

Paypal is not going to let you do this, their TOS states you can't charge a premium for people paying with Paypal over other forms of electronic payment such as credit cards; however, just like the card industry, you can offer a cash discount.

Its the same for AMEX, you can't charge more for using AMEX over Visa, even though AMEX generally is 1-2% higher than Master/Visa/Discover. Paypal isn't going to let you single them out.

Hopefully as time goes by, governments of the world will realize they need to nationalize some sort of digital currency where we can eliminate credit cards altogether. I much rather have payment cards that work just like cash but in digital form wihtout all the fees / rewards nonsense, but untill that happens we have to suck it up just like the rest.

Thanks for your pointers on thsi issue. Helpful. I accept we will get soem abandoned carts, but we sell a unique product, dare I say the best er, shall we say, toy in the world, and customers that want it ,want it. So pay.

I hadn't really joined the dots on PP liking it or not. Suppose because here in the UK travel outfits (as a rule) charge for a booking made via card, though i would admit this is the exception rather than a rule here. No oher industry does as far as I know. But then their's can be big ticket, 'low margin' business. And you can't give up a 5-10% margin to a bank. So maybe he banks 'turn a blind.'

It occuredd to me, is thsi a workrpound? Rather if I put a product up as a kit, with the PP portion explained as a deletabel by none PP buyers, would this work. Even if i is a workround, (rather than get custom coding) I'm not sure its too clever. But would it work?

I've gone back and forth on this issue as well as the credit card surcharge issue. If you're selling a unique product that doesn't have much competition, I would just raise the price of the product. That may seem to "punish" non-Paypal users, but it's the easiest thing to do and doesn't alienate as many people.

I have some products that are somewhat unique - I manufacture it myself, material cost is very low so I have lots of room to "play" with the price. I originally sold one product for 50c. It was profitable for me at that price so I didn't feel a need to charge more. Well, I never anticipated that people would buy ONLY that product. Even with S&H of $3.95 I could barely cover my cost of the credit card minimum fees, cost of the envelope, shipping, my time to take the order and pack it etc. Plus, people thought I was "tricking" them by selling it so cheaply (it was a set of 64, they thought maybe I was selling it for 50c each piece or something). I got angry one day and jacked up the price to $2.50. My profit rose significantly, even with fewer orders (the drop in orders wasn't high).

I had considered having a minimum basket order to prevent these tiny orders. I had already started "flat rate shipping" which discourages 50c orders (but never eliminated them). Note that my "flat rate shipping/handling" incorporates my "per transaction fees" for credit card processing and I price my products to consider the shipping weight (a cheap product that is heavy will cost more than the same price product that is light)

The only thing that has "worked" for me is to raise prices until I'm no longer unhappy. So, if I had lots of chargebacks or problems with paypal, I'd be increasing my prices by 5% or whatever to cover my "trouble". This strategy is harder to implement with "commodity" products where people are buying solely on price/availability/shipping cost. But if you have a very unique product, it should work for you. Makes the accounting difficult...but it's far easier than custom coding or offending customers with extra fees.

I think in the past we've been guilty of one of the first errors of marketing. Under charging. When you don't have a commodity product you can stick more margin, and we've failed in the past to do this. So Coralgoose, pp issues or not, you're dead on right! But it still burns me up so often the payment providers earn large slice out of me for not a whole lot of effort. ie I have to suck it up.

Reckon I must need 'the therapy'...

or a holiday!

holidays...hear hear...what are they again?