Internet slowly wakes up to PayPal’s quiet fee hike
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 because the changes were so well hidden, the Internet has been slow to wake up to what amounts to a good increase in PayPal’s income.
Under the previous system, fees were charged based on the type of account the receiver was using as well as where the money was coming from. If the receiver was a premium or business account owner, he or she was charged 30¢ plus 2.9 percent of the transaction—the same applied to all accounts if the money was coming from a credit or debit card instead of a PayPal balance or directly from a bank account. People using personal accounts could make all these payments to anyone else for free.
In June, PayPal made a number of changes to its User Agreement and posted an update to the PayPal Blog. At that time, director of product marketing Heinz Waelchli wrote that PayPal had now begun allowing those with business and premium accounts to make personal transfers to friends and family for free. This, in itself, is a welcome update—I use my PayPal account to receive payments for items I sell on Etsy, but now I can send money to my brother from the same account without either of us having to give PayPal a cut.
What PayPal failed to do was inform users of the fact that any transfer having to do with goods or services will be charged the 3¢ 2.9 percent fee no matter who or where it’s coming from. This includes payments sent from personal accounts as well as payments made after someone has sent you a request for payment (even if that request has nothing to do with goods or services).
For example, a personal account sending another personal account money for a one-time payment for, say, mowing your lawn was not previously charged any fees on either side, but is now charged the usual transaction fee (the sender gets to decide who pays). The only way to avoid this is by selecting “gift” when making the transfer—something you can’t do if you’re following through on a purchase or invoice from someone. And, if you fall into this category (which many people do), it’s likely that you had no idea about the changes until just now.











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