PayPal, the cost?

In addition to the approx 4.4% commission, Paypal give a poor rate of exchange to sellers based outside the USA, which adds up to a further approx 4%, making approx 8.4% in total. This may be minimised by registering your account in your own country's currency and asking the buyer to pay in that currency. In that case the buyer may pay a commission for the currency exchange cost.
Best Wishes,
John

If I understand you, 2.9%+0.3 is ALL the seller pays. One can ignore where ever the money go through Visa, Master, ..? If this is the case, this is a bargain., because normally the seller pays a lot more than that. The high volume merchants pay about 4%, but most smaller store pay a lot more, up to 8% or even 10% to Am. Express.

brn said:

I'm going to simplify it a bit. Visa doesn't actually authorize
Visa (issuing institutions do via authorization institutions), but
let's pretend they do. They charge a fee to authorize that
transaction. They charge that fee to the settlement institution.
The fee varies depending on the risk level. Visa (or whomever) has
some well defined rules for fee/risk. The setttlement institution
passes that fee onto the merchant by reducing the funds that they
receive. It is up to the merchant to absorb this fee. In fact,
most major credit card companies have explicit rules against
charging the buyer extra to cover the fees. To my knowledge, they
do not have rules against charging the seller.

This is where PayPal makes it's money. They charge the seller for
these authorization and settlement fees, plus a little on the top
for themselves. They also make money on the financial float (the
period of time they hold the funds).

Having said all that, as Marty said, PayPal lays it out here:
http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/fees-receiving-outside

P.S. There are several variations of how this works. I wasn't
going to write the book it would take to cover them all. If you're
a merchant, you might see it a little differently.

Click to expand...

--
baruth

I want to preface this with, I will not speak for specific merchants/banks/authorizers/settlers/etc. I will only generalize based on my understanding of the industry. Even that, has it's limitations because the policies are complex and vary quite a bit.

baruth said:

If I understand you, 2.9%+0.3 is ALL the seller pays. One can
ignore where ever the money go through Visa, Master, ..?

Click to expand...

That would be my expectation, based on how the industry works. Of course, Paypal policy will dictate the specifics.

baruth said:

If this
is the case, this is a bargain., because normally the seller pays a
lot more than that. The high volume merchants pay about 4%, but
most smaller store pay a lot more, up to 8% or even 10% to Am. Express

Click to expand...

You are correct that volume has a lot to do with it. With enough volume, one can pay a flat rate for services that others have to pay per transaction for. Keep that volume up, and the per transaction fee can be minimal. Of course, the bigger you are, the more you can bring in-house for further savings. Paypal also has a VERY inexpensive model for bringing in the transactions.

I confess to being much less familiar with small merchants than larger ones so this may sound like babble. Small merchants can pay through the nose for direct service (if even available) or they can subscribe for indirect services. The later will usually save them a little bit of money and lot of headache. With the later, other services are often included that will increase the per transaction rate. This might include equipment rental, transaction transport, transaction capture, transaction settlement, and reporting.

In addition, the major credit card companies do vary their transaction rate, based on risk factors. It is in paypal's best interest to develop their environment to keep those risks at a minimum, reducing their rates further. For a smaller merchant, such steps are often not cost effective.

I am no longer a PayPal subscriber.

First - the terms as a buyer are great
Second - the expense for the service as a seller are reasonable.

But there is a risk. Buyers are not as protected as PayPal implies. I know from experience, and as a last resort (PayPal refused to assist; Merchant would not issue refund) I had my credit card company revert a charge. PayPal responded "unkindly" (legally watching my words here) to the action and the merchant threatened me. The outcome was not a very good experience as a PayPal customer.

As a merchant, PayPal will debit your account when a credit reversal is applied against PayPal - in my opinion without adequate warning or proof the reversal was justified. A merchant account with a credit card company has much more leverage and protection. Once again, my opinion based on experience.

Customer service... 1-866-648-5853