Paypal Policy Update Coming June 3 – July 1, 2009

2 May

There’s some new Paypal updates on the horizon.  To read them in full, log in to your Paypal account and click “Policy Updates” on the far left side under “What’s new” or follow this link: Paypal Policy Update

Nothing looks particularly upsetting, unless you’re still rocking a “Personal Account.”  If so, you’re probably going to take issue with the new commercial/personal transaction clause.   The other major change is the pilot program to switch the default payment method to credit card.  Users have been complaining for years that Paypal makes it nearly impossible to use a credit card when paying with Paypal and this may actually be a step in the right direction.  Let’s take a look at the changes:

Effective June 3, 2009:

Prohibited Activities: You may not use the PayPal service for activities that:

“4. involve the sales of products or services identified by government agencies to have a high likelihood of being fraudulent””

Does this sentence strike anyone else as a bit vague?  We can assume that Paypal kept this as wide open as possible so they can deem new products and services “highly likely to be fraudulent” at any time.  Accepting Paypal Mobile to sell crack cocaine?  You might have to switch to Google Checkout come June.

Also starting June 3, 2009:

“1. Section 4.2 of the user agreement will read as follows:

  1. “4.2 Receiving Payments for Commercial Transactions and Personal Transactions.a. Fees depend on whether you are making a commercial transaction or a personal transaction. A commercial transaction involves buying and selling goods or services, and payments received when you send a “request money” using PayPal. A personal transaction involves sending money to and receiving money from friends and family without making a purchase. b. If you are selling goods or services, you may not ask the buyer to send you a personal payment for the purchase. If you do so, PayPal may remove your ability to accept personal payments.”

It appears that Paypal is tired of people with Personal Accounts not paying money to use Paypal.  I understand where they’re coming from.  If it was up to me,  I would charge you $500 per word you read.  Unfortunately, I don’t have a borderline monopoly on auction blogging so I’ll have to leave extortion to the big guys.  Paypal will require anyone with a Personal Account who sells anything, ever, for any amount, to upgrade to a “Premier Account.”  The benefits of the Premier account include paying Paypal fees on every transaction you receive money on and  having the opportunity to give them your Social Security Number and other vital information they’ll likely lose to hackers from China some time in the future.

Next, Paypal reiterates when Personal Account holders are screwed and introduces new fees.

“8. Fees. All fees are in U.S. Dollars unless otherwise stated.

Fees depend on whether you are making a commercial transaction or a personal transaction. A commercial transaction involves buying and selling goods or services, and payments received when you send a “request money” using PayPal. A personal transaction involves sending money to and receiving money from friends and family without making a purchase.

Personal Transactions. Fees depend on the payment source that the sender selects. The amount of the fee will be shown at the time the payment is sent. The Fee is paid by either the sender or the recipient. The sender decides who pays.”

There’s a long list of various fees and charts that follow.  I’ll let you take a look at them on the Paypal website linked above as I can ‘t read over Paypal fees without tearing up.  The “good news” is that your broke Uncle can send you money with his credit card and even choose to pay the fees himself.  The bad news is you’ll be charged the standard 2.9% rate rate plus 1% more if he’s still dodging the draft and sends the payment from Canada.  The other bummer from this section is that Paypal is charging $1 on ATM withdrawals with the Paypal debit card.

Starting June 8, 2009 there’s actually the potential of some good news for buyers.

Pilot Program that will change your default payment sources (section 3 of the User Agreement)

Some PayPal users will receive an email from PayPal informing them that they have been selected to participate in a pilot program that will change their default payment sources for a 12 month period. If you are selected to participate in this pilot, your default payment sources will be changed as follows:

  1. Not “required” to use your Balance when sending a payment. Right now, if you have a Balance in your PayPal Account, you are required to either withdraw your Balance, or use it to fund your payment. If you are entered into this pilot, you will have the option of changing your payment source at the time you make a payment even if you have a Balance.
  2. Bank before Balance. Right now, if you have a Balance in your PayPal Account, you are required to either withdraw your Balance, or use it to fund your payment. If you are entered into this pilot, you will make payments from your bank account instead of your Balance. In addition, you will have the option of changing your payment source at the time you make a payment even if you have a Balance.
  3. Credit Card before Balance. Right now, if you have a Balance in your PayPal Account, you are required to either withdraw your Balance, or use it to fund your payment. If you are entered into this pilot, you will make payments from your credit card instead of your Balance. In addition, you will have the option of changing your payment source at the time you make a payment even if you have a Balance.”

I’m glad they repeated their current idiotic policy three times here.  Although I shouldn’t really call it idiotic since it’s genius for Paypal to do everything they can to trick people into using their Paypal balance rather than their credit card.  The problem here is that it’s a pilot program and there is no indication as to how many people will be invited.  There’s also no guarantee the only person to receive the email won’t be Meg Whitman and she’ll respond that she hates the program and Paypal will come up with their standard, “”In order to protect our sellers we’re not doing what they want or what’s logical for anyone with a brain.”  Nonetheless, it shows that after like 10 years and thousands and thousands of complaints, Paypal is actually capable of sort of doing what their users want, kind of.  This is what Disney World had in mind when they created the “Carousel of Progress.”  Well, maybe not.

Finally, a bit more about the Paypal Debit Card.  The card is such a pretty blue I really don’t see why everyone isn’t using this thing for every purchase.  Who wants an American Express Centurion card anyway when everyone would rather pay money to use Paypal?  The answers elude me.

  1. “5. PayPal Preferred Rewards – Cash Back.

    1. Cash back. The PayPal Preferred Rewards program provides 1% cash back on the net amount of your eligible monthly purchases (purchases minus returns and reversals). Net amount means all eligible purchases minus reversals for any reason including returns and refunds.
    2. Eligibility

      1. You must have a Premier or Business Account.
      2. Eligible purchases. To be eligible for cash back, the Debit Card purchase must be an online or signature-based purchase that does not require a PIN (personal identification number). Some merchant locations offer you the option of choosing “Credit” or “ATM/Debit” when making a payment. To qualify for cash back, you must choose “Credit”.
      3. Your PayPal Debit Card must be in good standing at the time you make an eligible purchase and when PayPal makes the cash back payment.
      4. If you sell on eBay or other websites, you must enroll in the PayPal Preferred Program and turn on the “Tell Buyers that I prefer PayPal payments” preference.
    3. Pay out. The cash back will be calculated at the end of each calendar month and added to your PayPal Balance.
    4. The PayPal Preferred Rewards program is not available for debit cards obtained through your Personal Account or for the Student Card.”

More hate for Personal Account holders.  If you’re still using a Personal Account, I recommend just pulling out a $20 bill from your wallet and attaching a sticky note that says “For Paypal in June.”  Then take out the rest of your money and add it to the $20.  I know what’s coming for you because I’ve personally paid Paypal somewhere around $100,000 over the years and the other businesses I’ve run have paid much, much more.  So take it from me, it’s going to add up even faster if you accept a lot of small payments because of that lovely 30 cent fixed cost on every transaction.

There’s a couple thing to note  here.  First, Paypal is going to keep your cashback until the end of the month.  Second, Paypal isn’t going to pay your cashback if they decide to limit your account, which they can do for any reason, at any time, whenever they want.  The Paypal debit card has been convenient to use in the past, but this just makes it impractical.  On top of charging $1 for all ATM withdrawals plus whatever the ATM owner charges, Paypal has the option to deny you your cashback and you have no recourse!  If you’re buying a TV or other expensive item, use a different cashback card.  There’s better ones out there anyway.

It’s kind of sad that this is one of the better policy updates Paypal has announced in some time.  Unless you’re a Personal Account holder (sucks to be you), love the color of the Paypal Debit Card (shop around, maybe you can find one in a similar color), or love fee increases (who doesn’t), there isn’t that much to get upset over.  And the credit card default thing is actually what a lot of people have been asking for.

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