PayPal Working Capital is a merchant cash advance linked directly to your PayPal account.
Fee Hike as PayPal Tiered Rate replaces PayPal Merchant Rate
On and from the 19th of August 2019 the PayPal Merchant Rate no longer applies. In place of the PayPal Merchant Rate, a new lower PayPal Standard Rate of 2.9% plus a 30p Fixed Fee applies to each domestic Commercial Transaction payment received by UK, Jersey, Guernsey, Isle of Man or Gibraltar merchants. There is also news of a new PayPal Tiered Rate for larger merchants.
No more PayPal Merchant Rate, lower Standard Rate, higher fixed fee
The headline news is that under the PayPal Tiered Rate everyone will be paying 30p per transaction (or 25p for very high payment volumes) instead of the current 20p under the PayPal Merchant Rate, but for those who previously weren’t on the PayPal Merchant Rate the percentage fees will drop from 3.4% to 2.9%.
Almost everyone will pay more bar very small and very massive merchants. You will want to read and understand the impact of the fee changes as it could determine which products it may no longer be profitable to sell. Even with the new lower PayPal Standard Rate, the increase of 10p represents a punitive fee increase for low value products.
New PayPal Tiered Rate
Some users have been informed of a new PayPal Tiered Rate in August due to come into effect on the 16th of August 2019. We don’t know how you get invited to this, if you’re not (or if your payment volumes are below £20,000 per month) then it looks like the PayPal Standard Rate and Fixed Fee per transaction will apply to you.
Whilst users with monthly payment volumes up to £6,000 or between £15,000 and £20,000 won’t see see a percentage fee increase, everyone with payment volumes outside of these ranges will. Users with very low payment volumes (under £1,500 per month) will see a percentage fee decrease from 3.4% to 2.9%.
There is some good news, for those with monthly payment volumes in excess of £75,000 there are two new tiers with discounts of 1.4% up to £200,000 and 1.3% if your monthly payment volume is greater than £200,000.
Whilst the percentage fee increase is unwelcome, for those with low average selling prices the biggest hit will be from the fixed fee increase from 20p to 30p. This hit those with very low selling prices the hardest. Those with massive monthly payment volumes and higher average selling prices may find themselves better off due to the new discount tiers.
PayPal Merchant Rate vs PayPal Tiered Rate comparison table
|3.4% + 20p||Up to £20,000||2.9% + Fixed Fee (£0.30)||-0.5% Plus 10p|
|£1,500.01 – £6,000.00||2.9% + 20p||Plus 10p|
|£6,000.01 – £15,000.00||2.4% + 20p||+0.5% Plus 10p|
|£15,000.01 – £55,000.00||1.9% + 20p||+1.0% Plus 10p|
|£20,000.01 – £75,000.00||1.9% + Fixed Fee (£0.30)||Plus 10p|
|Over £55,000||Price on application||vs previously Negotiated Rates and Plus 10p or Plus 5p|
|£75,000.01 – £200,000.00||1.4% + Fixed Fee (£0.30)|
|£200,000.01 or more||1.3% + Fixed Fee (£0.25)|
Other PayPal Changes
PayPal announced a ton of Policy Updates on the 14th of June although we’ve not seen mention of the new PayPal tiered rates online yet.
Other changes include changes to the Cross Border Commercial Transaction payments fees, and amendments to PayPal Here fees.
On the plus side, Ebay managed payments don’t look as bad now.
simple…put our prices up by 10p on every item on Ebay and our own websites – let the customer decide where to buy from, Amazon or Ebay. I’m just tired of fee hikes from all sides, at the end of the day the end user has to pay for these increases , they cannot continue to be absorbed by merchants. If a product stops selling or other sellers continue to absorb these increases then we just stop selling the product.
Apart from these fee hikes, Paypal are also doubling the cross-border fees from 1% to 2% if you are selling to USA/Canada.
Also Europe II increases from 1.3% to 2% ( that’s Albania, Andorra, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Georgia, Hungary, Kosovo, Latvia, Liechtenstein, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Serbia, Switzerland, Ukraine.)
It all seems a little difficult to justify in my opinion.
Those cross border fees are incredible.
At least with Amazon you can use a company to create bank accounts in the currency to limit their “Extravagant” cut, Paypal have that door nailed firmly shut for the likes of us.
Surely basic economics say help seller increase sales and your money goes up anyway.
without the need to make them increase prices and then go elsewhere.
Like the train passing through our home town with 3 carriages and 40 people on it they then put up the price it went to 30 people on it then they put it up again it now has 2 carriages and about 10 people on it.
Not rocket science is it. Every year trade suppliers and postal companies increase prices so we increase prices so common sense says ebay money and paypals money grows naturally without increasing percentages.
The tiered rate email that I (and some others) have received has 20p fee still on it. Not sure if this is an error and they have not put the new fees in. Would be nice to still be on 20p but I get the feeling I won’t be
Pure RIP off, another case of another company trying to squeeze as much out of people / businesses as they can, with the economy not in great condition I’m pretty sure there will be a backlash, end of the day what do PayPal do that warrants 30p let alone a percentage of the sale?
Ebay’s new payment method will put paid to another greedy company,
Something isn’t right… the email we received also states £0.20p per transaction fees. Here’s the proof:
Interesting, cos the emails we’ve seen definitely say 30p as per https://tamebay.com/wp-content/uploads/2019/06/PayPal-Tiered-Rate-Fees.jpg
However, the tiers you have on your email are the old Merchant Rates which are apparently going so maybe you’ve been sent the old fees?
Will need to reach out to PayPal to clarify, although undoubtedly it WILL be the latter £0.30p.
Problem is £0.10p extra per transaction is not a small increase. It’s a 50% hike in PayPal’s fixed price transaction cost.
500 transactions a day, that’s £50 a day. A £0.10p hike doesn’t sound like a lot but £50 a day, or £1500 a month surely does!
Are the micropayment rates still going to be offered (5% + £0.05)?
I was wondering this as well Robert. Definitely something to look into.
1000 transactions a month, so that is £100 extra costs for doing nothing from me alone. As well as extra percentages on cross border fees and commission. Just another company hiking fees, just like Ebay did last year. Every year it is the same. You work hard to increase your range, your sales etc, but someone along the way increases their cut and you end up with zilch extra for your efforts. Since 2016 I have increased my turnover from about £80k to £180k but I am earning virtually the same because of HMRC VAT, Ebay & Paypal fee hikes, GBP£ worth 15% less because of Brexit, increased insurance for my stock, accountancy fees. So I have recently asked myself, what is the point? I am going to go decrease my sales to below £85k and earn more money in the process.
Wow PayPal’s stealthy increases are almost eBay-esque, and talking of eBay- and I never thought I would say it- but their managed payments are starting to look pretty interesting.
anyone found any news on if the micropayments are effected?cant see any mention of it anywhere and ive had no email at all
The email has landed. Absolutely no mention at all of fee hikes in the email, just the standard ‘We’re making some changes to our legal agreements that will apply to you.’
The Fixed Fee for payments received in UK Pounds Sterling (GBP) at section A4.6 of Schedule 1 (Table of Fees) is increased to 0.30GBP.
The standard fee will be 2.9% +30p, but if we use the ‘New checkout solution’, its 1.2% +30p. What is this new checkout solution….?
Here’s the link I got:
Did you get any mention of the tiered pricing?
It all seems very strange, some get an email with tiered pricing and 30p, others get an email with tiered pricing and 20p, others get an email with no mention at all!
Nothing Chris. Here’s the entire email:
We’re making some changes to our legal agreements that will apply to you.
There is no action needed from you today, but if you would like to learn more, you can find details about these changes, when they apply and what you can do if you want to decline the changes on our Policy Updates page.
You can also view these changes by visiting paypal.com/uk, clicking ‘Legal’ at the bottom of the page and then selecting ‘Policy Updates’.
If you have questions about any of these changes or your account, please don’t hesitate to get in touch with us.
Thank you for using PayPal.
I got this email, too.
No sign of any email with the tiered info.
I’m guessing here… and it is only a guess, that PayPal are sending emails with the Tiers mainly to sellers likely to sell more than £20,000 and not sending this information to sellers who will lose the PayPal Merchant Rate but won’t benefit from the PayPal Tiered Rate?
You could be right Chris.
I’ve just had the exact same email to my personal PayPal account. Our customers seem to be migrating to Amazon and our Website (mainly Stripe), so we’ve just this last couple of months dropped below £20k with PayPal.
Do you have any news on what the ‘New Checkout Solution’ is? Thats promising 1.9% +30p fees. I can’t find any mention of that anywhere?
The biggest increase comes by shifting the tiers. Previously over £15000/month could “enjoy” the 1.9% rate – we just squeezed over. Now we have to get to £20000/month (and a 25% increase in volume is definitely NOT likely!!) so fees shoot up to 2.9% (a HUGE 52.6% increase plus the 50% increase in the per transaction fee of 20p to 30p) – minimum increase in cost, excluding the 20p-30p costs will be £1800 per annum – rather a big chunk out of our ever dwindling bottom line….
(having a new meaning of “In it quit us ???)
Wonder how EBay managed payments will compare?
Imagine the public outcry if the high street banks tried to do this! This is, after all, simply a “bank charge” Would the government step in ?
Perhaps Boris will be brave enough to step up for small businesses 😀
I may be in a minority here but this is unlikely to affect me much at all. I sell a relatively small amount on Ebay with high value items (average sale price £850). Some months there is only 3 or 4 items going through Paypal, so the extra 30p or so shouldn’t make much of a difference.
Good news Paddy, you’re already paying 20p so the 30p is only an additional 10p. Glad there’s at least one person it won’t impact too much 🙂
Ow I feel so sorry for you pile it high sell it cheap merchants…Sad state of affairs when 10p will affect your profit margins…LOL
There would seem to be a Brexit deficit when it comes to cross border transactions. it seems I should move to Ireland given that half my trade is to USA/Canada
A2.3.1 Everywhere except Ireland
Cross Border Fee
Northern Europe 0.5%
Europe I 0.5%
US / Canada 2.0%
Europe II 2.0%
Rest of World 2.0%
Cross Border Fee
Northern Europe 0.4%
Europe I 0.5%
US / Canada 1.0%
Europe II 1.3%
Rest of World 2.0%
I guess Paypal exist within a shameless tax avoiding Irish structure like most tax avoiding techies did after Luxembourg was throttled down.
I’ve read the whole new terms and conditions.
section a3.11 has the micropayments stuff – it remains unchanged at 5% +5p
I contacted PayPal directly with regards to the Micropayments situation, and they have confirmed that these will remain unchanged at the rate of 5% and 0.05p per transaction.
Wow, as a beneficiary of the 1.9% currently, I am facing an increase to 2.9% plus the extra 10p for each transaction. That is going to cost about £2,500 per year, I cannot possibly absorb that, and neither do I have any options left to mitigate the impact.
I seem to spend increasing amounts of time contorting myself in an effort to hold prices for the customers, but I really cannot absorb any more.
I called PayPal and asked what the justification for these enormous increases was, the reply…. processing costs have gone up. Sure they have, in this age of ever increasing automation, the costs need to go up 50%. That sounds like a load of old pony to me.
I remember the phrase ‘squeeze them until their pips squeak’, I think it was a politician, but who, I cannot remember.
I just double checked, and someone has made off with my pips !
Terry, we are the same as you. We expect the changes to cost us at least £4,500 per year. Our average order is only around £7 so the increase in the transaction fee is going to cripple us. Business is already down for us in comparison to previous years and these fee changes feel like the final nail in the coffin.
We are tied in to the lease on our warehouse until the end of 2020 so we are planning on winding our business down over the next 18 months and trying to get in to something where we can actually make some money or even go back in to employment where we will hopefully have a steady income, paid holidays and less stress!
Sorry to hear of your situation. What surprises me with all this is just how little kerfuffle there has been on message boards about it. Perhaps the fact that for a certain (and not insignificant) group it represents a 50% increase in payment fees has escaped peoples attention.
Unless the Managed payment thing on E-Bay comes along with a decent rate to save the day (har de har har), then I have no choice but to jack up the prices on E-Bay of everything.
I have also found that for lower value items, the profitability is already better on Amazon than E-Bay, and this is only going to make the threshold for that higher still.
I am also contemplating binning Paypal from my website because card payments are much cheaper. The only reason I haven’t done it already is because the margins are better on the website, and I don’t want to reduce the trade which goes through it, removing Paypal might make it less attractive.
My average order value is nearer £20, but with well over 1,000 transactions a month, that is a lot of 10p’s and 1 percents.
I have to wonder whether this is Paypal putting the boot in to E-Bay, all jolly decent of them, but I don’t appreciate being in the middle of it.
I do wonder, when these big corporates have sucked up all of the money (they appear to have most of it already), and none of us have anything left, what they are all going to do then. I guess they can kill off each other instead.
Lianne, I hope you can find a solution to the issue. I think I may just have to remove most lower priced items from E-Bay and focus them on Amazon only. Either that or just sell them in store. After all, if there is no money in it, why bother.