PayPal "hides" new fee; causes customer revolt (EBAY)

PayPal has added swingeing new fees for personal accounts, and nobody seems to have known it was coming. In IT Blogwatch, bloggers unpick PayPal's surprising claim that it's not actually a new fee and that they told us months ago. (NASDAQ:EBAY)

By Richi Jennings. August 20, 2009.

Your humble blogwatcher has selected these bloggy morsels for your enjoyment. Not to mention if Star Wars was real...

Matt Mickiewicz makes his mark:

If you’re a PayPal customer, you may be in for a surprise the next time you look at your account. Personal accounts are now charged a 2.9% fee + 30 cents to receive payments for “Goods” or “Services”, something that was previously free. No formal announcement about the change was made.


They chose not to announce it because, "it would be a more useful experience." ... This double-dipping — charging both sellers and receivers for transactions — will result in a major increase in fee revenue for eBay Inc. which owns PayPal.

Jacqui Cheng clarifies the "unannounced" claim:

PayPal has generated its fair share of controversies over the years, but it has begun to stir up another one by adding new transaction fees that affect all customers—without telling anyone about them. The company slipped the fees in with a more general update to its "send money" service in June, but ... the changes were so well hidden ... [in] changes to its User Agreement.


It comes off as a shady way to hide the addition of fees to mass numbers of transactions. Sure, users would have been irritated either way, but doesn't PayPal know that the way to handle bad PR is to be the first one to control the message? People value openness and transparency—especially when bad news is involved. Now, those controlling the message are other, ticked off users, and that won't be an easy one to clean up after.

Jared Newman spotted this earlier:

As a writer, a significant chunk of my earnings come through PayPal. ... When money started rolling in last month, I noticed that a fraction of it (2.9 percent, plus 30 cents) wasn't making the jump from my employers' accounts to my own.


As I explained to Charlotte Hill, PayPal's PR manager, the fees themselves don't really bother me. PayPal can run its business as it pleases, and I have every right to take my business elsewhere. What's really infuriating is that there was no warning about the new fees, and no notification once they were instated. Hill protested. An e-mail did go out, she said ... and a post on PayPal's official blog. ... Well, not really. ... You're just being underhanded.

PayPal's Heinz Waelchli tries to "clarify" (but just makes it worse):

Our send money service, which we updated back in mid-June, gives people an easy way to send money to family and friends. For our customers sending personal payments funded through their bank account or PayPal balance- which means for anything other than business, such as sending a gift, paying for a lunch, etc. - this service is and has always been free.


Recently, we updated our send money feature and also clarified the process of sending money between friends and family for free. ... I hope this helps clarify things.

Wes Novack is incensed at PatPal's "shady practices":

You “weren’t really adding any fees” ? Really Paypal? I’ve been doing the same type of funds transfer every month for over 2 years and now when I do that same transfer, the recipient is charged 2.9% + 0.30. How is that not adding any new fees?? How is that a more useful experience?? The bottom line is, personal account Paypal users weren’t being charged for this type of fund transfer before and now they are. Paypal did not notify its users. Almost no one knew about it. Everyone I’ve talked to had no idea about the new fees.


[Waelchli's] reply still didn’t fess up to the fact that they started charging for something that was previously free, without informing their users adequately. Sorry Paypal, but you screwed up. You have added new fees for personal accounts and you won’t even admit the change.

But Joe Lopez has an different perspective:

While some say Paypal fees are high, once you take a look at other packages available to sellers who wish to receive credit card payments, you will see the overall cost of setup and transactions are lower than any other option available. Considering that and the integration with your ebay listings and you see it is the best choice available hands down.

lophophore has seen it all before:

Paypal is operating as an unlicensed bank. I am amazed that the Feds have not already come down on them.

So what's your take?
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Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and spam. A 24 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You can follow him as @richi on Twitter or richij on FriendFeed, pretend to be Richi's friend on Facebook, or just use good old email:

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