There is some good news for existing sellers with a past track record – if you’re setting up a new selling ID you can link it to an existing eBay account and the PayPal holds won’t then apply to you. There’s no information currently on how to link them so I’d suggest PowerSeller support.

This step, although designed as a security step to ensure buyers don’t lose out (by which I guess I mean so that PayPal don’t lose out if a seller turns out to be unreliable), is going to be devastating for new sellers.

I remember when I started out on eBay and cash flow was essential – postage costs rack up at an alarming rate and the ability to access cash quickly enables these costs to be paid. With PayPal holds new sellers will be unable to withdraw funds for three weeks, or even to use payments to fund PayPal postage payments – the upfront investment in selling on eBay has just risen significantly for smaller sellers.

As with all PayPal holds funds may be released before the 21 days if the item delivery is confirmed or if positive feedback is received.

The two companies have long been rivals, but an alliance could now make sense. Insiders say that merchants, particularly in the US, are unhappy with using Alibaba’s own payment system Alipay, and are demanding the facility to use PayPal. For PayPal, Alibaba could offer the potential for huge expansion in the Chinese market.

Alibaba’s PR department has said that the company will decide whether to adopt other payment tools based on user demands. Merchants outside China are likely to favour PayPal over many alternatives: Alipay is unfamiliar, and bank transfers to China are expensive and the costs are borne by buyers. PayPal, on the other hand, offers the cashflow-speeding possibility of spending your earnings directly on new stock, something that newer and smaller traders value intensely.

It’s an interesting discrepancy, because on the face of it, none of these scores should be affected by payment method. Most listings on eBay UK must now offer PayPal as a payment option, so if payment’s made by cheque, that’s by the buyer’s choice.

Frankly, I’m not surprised to see the “dispatch” DSR lower for cheque payments: buyers, often, think of “dispatch” as “the time between clicking the Buy It Now button, and receipt”; they don’t think “oh but it took me a week to put a cheque in the post”, they just think “I had to wait ten days for delivery”. No, it’s not fair – but as my old granny said, whoever told you life was going to be fair.

I can *just* about understand for the difference on the communication score too. With a cheque payment, there is so much more to go wrong. Cheques can not get posted or go astray in the post or be untraceable to a transaction or just not fit into the normal automation of business – so I can understand that communication might be more fraught, and get marked down.

But item description? How does payment method affect whether my item’s like I described it or not? Answer: it doesn’t. It can’t.

And more than anything, how can payment method push the always-worst DSR, P&P, down from a safe-ish 4.74 to a downright dangerous 4.6?

I’ve said it before and I’m going to keep saying it: eBay feedback is a farce. Specificially, the DSRs are a farce and do not do what they were designed to do.

Once upon a time, eBay talked to some buyers and what they found was that those buyers were afraid to leave negative feedback. Some buyers asked for a way to say “the P&P was a rip-off” without the seller seeing the red dot and knowing what they’d done. Others said they wanted to be able to say the P&P was a rip-off without leaving a neg when they were otherwise happy. And so the DSRs were born.

But what PayPal’s figures show is that this granular marking isn’t what buyers are doing. Someone who is annoyed that their cheque payment delayed delivery by two weeks is marking down on *all* the criteria. Someone else who’s annoyed they got a UID before they posted their payment is marking down on *all* the criteria. It’s quite clear from PayPal’s figures that buyers who pay by cheque are generally less happy – but it’s equally clear that some of the things that they’re marking sellers down for cannot possibly be related to the payment method. Buyers are using these very specific scores to reflect their feelings about the transaction in general.

Sellers should take these figures to heart. The pro-cheque argument is often made that buyers should be allowed to pay how they like: well, not at the expense of my TRS badge should be the response to that. If nothing else, cheque buyers need extra help, careful handling, nurturing through the transaction.

But eBay should take these figures to heart too. They show, quite obviously, that the feedback system is not right.

A spokesman for the bureau said that complaints against eBay were piling up. German eBayers use direct bank transfer much more often than British or American buyers do, and so the imposition of this new rule has caused outrage, primarily because it’s imposing more fees on sellers. Commenters on the eBay Germany sellers’ forum were unimpressed: “well that’s enough reason for me to say goodbye”; “eBay gets less and less attractive”. Sellers who are saying in their listings that buyers must cover the PayPal fees are having those listings ended.

An eBay spokesperson said that the company was “convinced that the introduction of PayPal as one of several payment methods for sellers with fewer than 50 feedbacks, is legally unobjectionable”, and that it was in communication with the bureau to explain what benefits the new policy offered buyers and sellers.

Der Spiegel has more info (in German).

The link is to a document which is actually quite good, it kicks off with the statement “A dispute is simply an opportunity for the buyer and seller to communicate directly with each other. By opening a dispute, you’re asking the seller for help to resolve problems you’ve had with your transaction.” I also like the key points and in particular “Sellers are normal people like you. Although the situation may be frustrating, try to keep things amicable so you can work together to reach a solution.” Personally I prefer an amicable email or eBay my message and I’ll put things right for my customer, but if things are going to go bad I’d rather my buyer read the dispute document than not.

US PayPal policy change

There’s a change to PayPal’s user agreement in the US, which doesn’t appear to have been added to the UK agreement yet. Transactions will no longer be eligible for seller protection if:

“Items that are not shipped to the recipient’s shipping address on the Transaction Details Page. If you originally ship the item to the shipping address on the Transaction Details Page but the item is later redirected to a different address, you will not be eligible for seller protection. We therefore recommend not using a shipping service that is controlled by the buyer.

That means if a buyer redirects a parcel, uses a services such as Royal Mail redelivery or redirection then the seller is no longer covered for buyer protection, even if they shipped to the address on the PayPal transaction page.

I’m hoping that this one doesn’t come to the UK and it’s particularly unfair that buyers can redirect mail without the sellers knowledge. Not only is there no way to prevent mail redirection, but it’s a scammers paradise as once they’ve had your goods redirected PayPal won’t protect you.

personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service. During this time, customers can still make commercial payments to India but merchants cannot withdraw funds in Rupees to local Indian banks.

In addition (though not mentioned in the official communiqué), PayPal has apparently reversed all personal payments made to Indian accounts between 1st and 5th February. Payments for services too are being reversed, though an email sent out from PayPal support says that if payments were made for goods, they should be made again using the “Goods” tab and providing a shipping address, and they will be honoured.

Some users are speculating that this is being done by PayPal to stop fee-free personal payments – though PayPal’s own statement suggests it’s something more legalistic than that. More information if we get it.

TameBay chum Whirly had just such an email this morning. He duly mailed his buyer to say that the echeque wasn’t due to clear until 10th to 12th February. But, came back the reply from the buyer, PayPal have told me it’ll clear on the 9th, and I need my item for the 12th.

But the messaging gets worse: PayPal’s website states that echeques can take 6-9 working days to clear – meaning that Whirly’s customer’s echeque wouldn’t clear until somewhere between the 12th and the 17th. How’s anyone supposed to make an informed decision when the information is so inconsistent? Someone needs to learn to count.

We’ve been here before. PayPal are supposed to have cleaned up the messaging around echeques, making sure that buyers understand exactly what they’re doing, and that they should really update the card they have on file before payment, so that echeques don’t happen.

However much PayPal try to “improve communications”, the simple fact is that buyers don’t understand what an echeque is. Why should they? Who wants to learn the ins and outs of the British banking system just to make one simple payment? It’s time something radical was done.

This shouldn’t be down to sellers. We’re not party to what cards the buyer has on file with PayPal. We can’t see electronic transfers between buyers’ banks and PayPal. We’re guessing, in the dark, and it makes us look terrible. It’s time PayPal stopped making us do this. If it wishes to continue to offer echeques to buyers as a payment method, then *it* should fund the risk. Take the echeque – give the seller the money. And if, in the “rare” instance, it bounces, PayPal should be chasing the buyer for payment. Think how much that would improve the buyer experience. Think how much it would improve the *seller* experience.

And if PayPal isn’t willing to do that, then it’s admitting that echeques are dodgy, and it shouldn’t be asking sellers to deal with them.

Photo credit: © Grzegorz Kula | Dreamstime.com

Interflora are stumping up free delivery and Thorntons are offering 25% off, along with a number of other retailers offering discounts and freebies.

Down in India eBay are also ramping up for Valentines with an “eBay – Love Yourself” TV campaign. It’s all about loving yourself so much you get on eBay and buy the things you’ve always wanted, although rather annoymously and eBay India appear to have a large majority of sellers who’ve taken gift wrapping advice to heart.

Links have started appearing on eBay under the payment options to the PayPal credit card sign up page. (Many thanks to Sean of I.S Electronics for the image.) Unlike Bill Me Later it’s not possible to use the card to pay directly on eBay, however it can be use to fund a PayPal account or of course for direct payments to sellers with a merchant credit card account.

In essence it’s simply an advert for the PayPal credit card thinly disguised as a payment method. The question is what happens when a buyer tries to pay with a PayPal credit card and the seller doesn’t have a merchant account?

(If you’re unclear about the difference between holds and reserves, then this post has more details.)

Firstly, PayPal will never place reserves on every seller’s account. Some support staff seem to have made comments like “it’s not just you, it’s everybody”. Obviously that gives the impression that reserves are coming to all accounts, but PayPal have categorically denied it. Just because their T&Cs allow for hold on any account does not mean that holds will be applied to every account: they will not.

Reserves are for “the accounts that seem to be statistically the most dangerous”
There are a number of criteria which influence whether a reserve will be applied to your account. These include (but are not limited to):

• how long you’ve been in business,
• number of disputes/claims raised against you,
• negative feedback,
• high priced items,
• risky categories (mobile phones and tickets were mentioned specifically),
• sudden changes in selling activity such as a shift in prices or inventory.

The majority of reserves will be 10% or less, though there is no stated maximum and PayPal have confirmed that holds of 40% are possible.

21-day holds may now be applied to off-eBay transactions. Yes, you may get holds on website transactions as well as eBay ones. The release for these holds will be the same as eBay: proof of delivery or 21 days without a complaint (positive feedback won’t, obviously, be applicable to off-eBay transactions).

Account-based holds rather than transaction-based holds. Rather than looking at individual transactions, PayPal will now be looking at sellers’ overall activity. In other words, they’re looking at you, not your buyers:

good sellers who had one strange looking transaction will no longer see a hold, but sellers who have a bad run of disputes or negative feedback might start seeing holds placed on their account until things calm down.

Previously, sellers with more than 100 feedbacks, who had been registered for longer than 6 months and who had buyer dissatisfaction rates of less than 5% had been told they would never suffer a hold: now it seems that may not be so cut and dried, as a run of bad feedback or complaints could get a hold slapped on your account.

Indeed, not even eBay’s biggest sellers are immune now: White Elephant Media, one of eBay.com’s biggest media stores with a feedback score of 327,000, has recently closed down operations, due, they say, to being asked by PayPal to hold over half a million dollars in reserve:

Our PayPal/eBay account was closed November 18, 2009, after selling successfully on eBay for almost 6 years. Several weeks ago, we were asked by PayPal to give them a “deposit” so we could keep accepting PayPal payments. … At first PayPal asked for us to pay $212k into this deposit account. They expected it to be funded in about 3 months. On November 13th, … PayPal increased the amount they needed in our “deposit” account to $600k. … They closed our account after we indicated it would be impossible to come up with $600,000 in about 6 weeks during the holidays. Why they wanted more than a half a million dollars and when it would be repaid if ever was exceptionally nebulous and never explained to us. 48 hours after we were locked out of our account, there was well over $230k in the account. That is the money we use to pay for our merchandise and postage. We were denied access to it and therefore we are unable to operate.

If it could happen to White Elephant, it could happen to you.

So what can sellers do about it?

Firstly, bear in mind that it could happen. Many of the sellers I’ve talked to about this have said that their biggest problem was lack of warning. Some weren’t even aware that PayPal *could* put this kind of hold on their account.

Secondly, remember that this is about PayPal’s assessment of the riskiness of your account. Be realistic about that. Some areas *do* have the potential cause more trouble than others (mobile phones and tickets as PayPal said; I’d add software, refurbished electronics and designer clothing to that). If your courier consistently damages goods, or you’re using a less-than-reliable drop-shipper, or your customer service procedures are not keeping up with the level of your business, then you are at risk.

If you want to carry on trading on eBay, dropping PayPal is not an option. But you should (everyone should) consider if and how their business would survive without eBay and/or PayPal. Do you have an alternative? Is it *enough* of an alternative that you could ramp it up to replace eBay if you had to?

And if PayPal put a 10% hold on your turnover, could you trade through that? For those who take their buyers’ payments and use them to pay a drop-shipper, I suspect the answer is no. But – especially after this incredibly difficult year – many more retailers are cutting their cash-flow ever closer, using this week’s takings to buy next week’s stock. This is trimming it far too fine.

Look realistically at your cash flow and consider what would happen to your business if 10% of it were held for 180 days. If you couldn’t survive, then PayPal isn’t your problem – your cash flow is the problem, and you need to reassess it, and build up a cushion to protect you not only against PayPal holds but against any other unexpected thing that might be thrown at you.

“hold”

PayPal put the entire payment for a transaction in reserve, and the seller does not have access to it. The seller must dispatch the goods as normal. The money is released by PayPal to the seller under one of the following conditions:

• the buyer leaves positive feedback
• delivery is proven by trackable means (money released 3 days later)
• 21 days have passed without a complaint, chargeback, reversal or other claim by the buyer

(PayPal have said that if negative feedback is left but there is no claim filed, the seller’s money will be released after 21 days.)

Holds used to apply only to new sellers and to buyers deemed by PayPal to be risky; this, it seems, is no longer the case.

“(rolling) reserve”

PayPal hold a proportion of the seller’s turnover in reserve for 180 days. Typically this is 10% or lower, though we have heard of higher amounts.

Because this is a rolling reserve – in other words, they take a chunk of EVERY transaction you process – this means that PayPal will always hold a proportion of your payments in reserve, unless of course you cease trading or cease accepting PayPal payments. Once you have a reserve on your account, there are no stated circumstances in which it will be removed; we’ve certainly never heard of anyone getting one removed.

If your turnover increases, PayPal support have told one TameBay correspondent that they would actually *increase* the percentage of turnover held in reserve. Go figure that one.

In the past if you claimed for non-receipt of goods from a website transaction you would only have got a refund if the seller had sufficient funds to cover it in their PayPal account. If PayPal couldn’t recover the funds then you lost out. PayPal have removed that requirement for transactions taking place after the 1st November 2009 and buyers who win their claim for items not received will get their money back for the full value of the item, in the same way they already do when they use PayPal to pay for eBay purchases.

A huge number of websites now accept PayPal, including many of Britain’s biggest brands. This improvement to our buyer protection will give extra reassurance to over 20 million PayPal customers in Britain when they shop online at these sites. We regularly review and improve the protection we offer customers, as we recognise that it’s an important extra benefit of using PayPal.
– Carl Scheible, Managing Director of PayPal UK

There are still some notable exceptions, intangibles, services, custom made items, airline flight tickets, items prohibited under PayPal’s Acceptable Use Policy and digital content, cars are also excluded. To qualify for off-eBay buyer protection the buyer must pay the full amount of the eligible item on one payment and disputes need to be opened within 45 days of making the payment. Claims for items that are “Significantly not as described” are not covered when the items were not purchased on eBay.

This is a great move and can only increase consumer confidence when buying online and paying with PayPal. Consumers can now purchase from your own website with the same guarantee that they’ll receive their goods as they can when buying from eBay.

I’ve been reading the press releases and the (quite frankly boring unless you’re a geek) technical information, but I wanted to bring a flavour of what the new PayPal platform can offer so will cut straight to one application of interest to online businesses which was announced yesterday.

Payvment

For the first time anyone can open up a webstore on Facebook. Payvment enables you to create a store, load it with products, accept payments. If you have already created a page on Facebook for your business you’ll now be able to create a shopping cart so that customers can actually buy from you.

It’s more than just a static webstore though, customers can add purchases from multiple merchants and if they’re buying one item from you they can add items from other retailers to the same shopping cart. By enabling search across the whole of Facebook they’ve created a global selling platform that every retailer can add inventory to.

Ultimately Payvment are turning Facebook into an online shopping mall with multiple retailers but the benefit of a single shopping cart. That’s something that eBay need to sit up and take note of – the ability to add and remove items to a shopping cart from multiple merchants and then make a single payment via PayPal is what eBay has lacked for years. Now it’s available on Facebook which isn’t even known as a destination site for ecommerce.

There are a ton of other PayPal X applications either announced for release yesterday, or that will soon be released. If you’re a developer please do add a quick two line synopsis of your product in comments below and a link to where readers can find more about it. PayPal X is only of interest to our readers if it’s a practical useful application – so what will your PayPal X application do for us?

The low down is that Richard Branson and Virgin Money could be in the running to bid for a bank, they already applied to the FSA for a banking license back in October. The bank of Tesco was another possibility the BBC mooted.

There is another company it might be worth placing an outside bet on to become a bank. PayPal already have an EU banking license which was granted to them in May 2007. They’re one of the most ubiquitous payment methods in the UK – almost everyone who has an eBay account also has a PayPal account. They’ve already diversified with PayPal credit cards and PayPal topup cards so why not get into mortgages and deposit accounts?

Back in 2007 PayPal said there were no plans to use the new licence to offer traditional banking services but that was two years ago and it’s not often the opportunity arises to buy a fully fledged bank along with existing deposit customers and mortgages. Whilst there has been no indication that PayPal may have changed their mind I wonder what services the Bank of PayPal could offer?

I’m not sure who would be desperate enough to need funds when the typical transfer time has already reduced to 2-3 working days. That’s already a great improvement from a few years back when it wasn’t unusual for a PayPal withdrawal to take over a week.

There are of course cheaper ways to access your PayPal funds than paying £5.00 to speed things up. You could of course simply pay with funds from your balance to merchants that accept PayPal. Failing that if you purchase a PayPal top up card (which costs a one off £4.95) then you can transfer funds directly from your PayPal account to the PayPal card within 24 hours.

If however on the rare occasion you’re desperate for funds or have a large payment you just can’t wait for three days to spend feel free to donate a fiver to PayPal’s coffers and your PayPal withdrawal should hit your bank account one day sooner than normal.

It’s a whole year since PayPal acquired Bill Me Later, and as an eBay company it’s high time it was integrated for eBay payments.

With an APR of 19.99% it’s not an attractive long term finance option, but for US customers who simply want to delay payment until pay day and then clear their balance if full it’s ideal. The minimum finance charge is $2.00.

Doubtless PayPal will get this fixed at some point in the (hopefully) not too distant future, but in the mean time it’s a great reminder for me to suggest using Aimco software. Northumbrian introduced me to it about a year ago and it’s simply the best and easiest way to print out invoices and labels in bulk. If you’re still using PayPal packing slips take five minutes to watch the Aimco video and to read our write up from a year ago.

None of the commercial broadcasters showed interest when Setanta who were due to air the match dropped out. Kentaro who acquired the UK broadcast rights from the Ukrainian FA were left with a game and no one to broadcast it so decided to offer it online.

With the expectation of a million online fans wanting to pay they’ve turned to PayPal to handle online payments. If you’ve already got a PayPal account you’ll be able to pay your £9.99 simply by entering your email and password. Otherwise without even opening a PayPal account you can pay with your credit or debit card.

If the thought of hunching over your PC screen or treking across town to the nearest cinema fills you with horror then there are some lovely TVs on sale on eBay. Most modern TVs have a VGA or DVI input so that you can hook them up to your computer and once you’ve paid you’ll be able to watch the match in glorious technicolour.

Via the PayPal blog

Internet Explorer, Google Chrome or Apple Safari browsers running on Windows are all affected and the only safe browser is the latest versions of Firefox (version 3.5 or later).

Basically there is a flaw in Microsoft’s CryptoAPI used by many Internet browsers which allows a hacker to display authentic looking pages with https:// URLs. Normally https:// web addresses are secured by SSL certificates, but the flaw allows use of SSL certificates from other sources to be used to replace the PayPal certificate and it’s impossible for the user to spot the difference.

The security flaw was first published in July and Microsoft are yet to release a fix. Until then best practice has to be to use the Firefox browser to access PayPal.

Fair enough the Times article highlights paying with PayPal off eBay doesn’t offer quite the same level of protection as buying on eBay, but it’s relentless list of people that have lost money isn’t quite fair.

Shipping without tracking and shipping to different addresses other than on the PayPal payment page are common errors invalidating Seller Protection but the article goes on to suggest that paying with PayPal at “other online retailers, such as Topshop, Boots and Monarch Airlines” is less than safe.

Sure there is a 45 day limit for claims, but saying that once these retailers have removed the funds from their accounts there is little hope of redress is more than a little dismissive of the retailers reputations. Quite frankly I can’t see Boots and Topshop being out to scam their customers, and it fails to point out that for credit card funded payments buyers are doubly protected by both PayPal and their credit cards.

The article smacks of the same standard of journalism as their recent piece on buying on eBay. Even according to the article the Financial Ombudsman Service has only received 205 complaints about PayPal this year, of which just 64% were upheld – Out of the 20 million PayPal users making millions of transactions each month that suggests it’s a pretty safe service.

It’s easy to forget countless good transactions when one goes wrong. We all remember the times we lost money, but as a business there’s a balance between risk and reward and my business certainly wouldn’t be viable without using PayPal. If you’re a casual seller make sure you ship valuable items via a trackable method and when buying use the same discretion you would when paying with your debit card.

Student accounts are funded directly from parents PayPal accounts and so need no credit card information. Parents can either transfer a regular amount or top up when their child has run out of funds.

The Xbox LIVE Marketplace has added PayPal as a payment option, again currently in the US only. It’s also possible to add multiple PayPal accounts to an Xbox LIVE account and I’m guessing it’s just as likely parents will be keen gamers and spending their hard earned cash as well.

PayPal, MissionFish and JustGiving as well as some yet to be announced charities will be showcasing their API’s (Application Programming Interface). PayPal will have a new Beta API and JustGiving will launch their API at the event.

The aim of the weekend will be to get feedback on the API’s and produce some open source applications that charities can use in their fundraising. The event will be held on the 19th – 20th September and is free to attend although places are limited.

Book, turn up with your laptop and any software development kits you use and they’ll provide everything from WiFi to food, tunes and entertainment while you code.