PayPal Working Capital is a merchant cash advance linked directly to your PayPal account.
PayPal Fees change means PayPal Merchant Discounts have ended
This week, PayPal Fees changed in the UK. From the 19th of August, instead of paying 3.4% plus 20p per transaction with lower Merchant Rates for sellers turning over more than £1,500 per month, PayPal introduced new flat fees with Tiered rates only available for merchants with a turnover greater than £20,000 per month.
The new PayPal fees for most smaller merchants will now be 2.9% plus a 30p fixed fee. This will adversely impact sellers with very low average selling prices as the increase from 20p to 30p would be a greater proportion of the selling price than the 2.9% fee.
It’s also worth noting that if you fully refund a Commercial Transaction payment, PayPal will retain the 30p Fixed Fee portion of the Commercial Transaction Fee. You need to be aware of your returns and refunds rates and if they are high build the cost of 30p per return into your prices.
If your average selling prices are very low, you may wish to apply for PayPal Micropayments for which the base rates are 5% plus a 5p fixed fee.
What about tiered rates?
The current PayPal Fees section of the User Agreement notes that PayPal Merchant Rates have now ended but mention nothing of the new PayPal tiered rates. PayPal emailed some users back in June informing them of the new tiered rates, so if you take more than £20,000 per month through your PayPal account we would suggest giving them a call to check that you are getting discounted rates. If you’re turning over less than £20,000 then you’ll be stuck on the new 2.9% rate regardless.
When you might still pay the old 3.4% fees
So the fees are changing and the 2.9% plus 30p will be what you pay when you sell on eBay, and it might or might not be what you pay on your website depending upon which PayPal option you have implemented. Some users will still pay the older 3.4% website fees which will be a surprise, especially if you were on a Merchant rate with a significant discount:
- PayPal Web Payments Standard and PayPal Checkout fees are 2.90% + £0.30 per transaction.
- PayPal Web Payments Pro fees are 3.40% + £0.20 per transaction plus a £20 monthly fee.
It’s worth noting that PayPal have a myriad of different fees, many of which you might not notice (like currency conversion and currency spread) but which will impact your business. It’s worth keeping a check on your fees, especially since the recent PayPal Fees change, to make sure your costs are inline with your expectations.
Finally, if you are based in Ireland you may still benefit from paying the 20p fixed fee, however PayPal have already announced this will be going up to 30p in the near future.
It’s almost like they’ve scrapped merchant rates a year before eBay Payments comes to the UK just so that eBay can continue to say that most merchants will save money compared to using PayPal 😀
Yep! They didn’t switch us over to the tiered pricing automatically! Hopefully, we’ll get a refund on what they’ve overcharged us on.
I wonder if PayPal have done this as an “up yours” to eBay before the two part company forever, knowing that sellers will have to increase their prices to cover the extra cost, so making eBay look a little less competitive compared to the alternatives.
They may also be doing this because shareholders will want to see the same profits and dividends even once all the revenue from eBay sales has gone.
I foresee the law of unintended consequences biting them. Being realistic, PayPal were a little cheaper than most other payment providers, and are now on a par or a little more expensive. But without tiered pricing, there’s no target to have to hit to keep a tiered price. This gives us free rein to experiment with adding other payment providers to our website, giving our customers greater choice and PayPal even less revenue.
Totally scandalous. Paypal is supposedly regulated by the FSA, but how is this allowed? No competition at all and can just set their prices to whatever they want. My turnover is approx £180k, with over 1000 transactions amount, on average between £12-15 and a lot of sales outside the UK (approx. 60%). At a conservative estimated I will be paying approx £3000-3500 extra per year to Paypal, without ANY extra work/sales. That’s effectively a pay cut for me. As I’m on about £15k turnover per month I’ve lost my discount, and now pay much more per transaction, especially foreign. Clearly I’ve had to up all my prices, including postage, but there is only so much you can recover/incorporate especially on items that are already active. It’s just corporate greed, day light robbery.
I believe they may even be in cahoots with Ebay, so the Ebay managed payments fees can be almost as high next year when it gets introduced and it will look like it is a better deal for us. NOT!
I’ve just phone PayPal and been told I will pay 2.9% + 30p. We turnover more than 20k a month and was told that to get to the PayPal tiered rates, we would have to turn over £100K per month with them.
Transactions less than £20 will cost more in fees.
Transactions greater than £20 will cost less.
£20 is the magic figure.
The magic number for Paypal micro payments is £11.54.
If your average transactions are lower than this then you’re better off on micro payments.
Average transactions between £11.54 and £20,? Bad luck, you’ll be losing out.
Average transactions above £20? It’s a win for you.
Thanks Nick for this breakdown, I have now applied for a Micro account which is going to make a huge difference to my margins.
Our old Merchant rate was 1.9% plus 20p
Our new rate is 2.9% plus 20p (which I called Paypal business support to confirm)
We are 1% worse off on EVERY transaction. Average sale price of £200 5 sales a day………. nice!
If you want to change to Paypal Micropayment…Don’t bother using the live chat, they can’t help you…You need to phone 0800 3587911
I find it quite shocking to learn about new payment fees from a third party source (this website).
Nothing from PayPal itself.
No, not missed any email(s) as we have 4 different PP accounts.
PS. Most our transactions are £15-18 or less…………..
To people who have Paypal accounts in euro zone countries and accept GBP payments from UK.
It is worth checking what cross border fee percentage fee they are paying. I have switched to micropayments and noticed that paypal have been charging me 1.0% cross border fee instead of advertised 0.5% since about 20th August. They have acknowledged that this is wrong and apparently it is known issue and they are working on it, well it has been 4 days and they are still charging me double rate. I am sure there are more people like me, who are due a refund. Hopefully they simply just do not decide to change their advertised rate on paypal website to double rate instead of solving this issue.
Need to complain Gediminas to the FInancialo Conduct Authority.
These companies all seem to be in Collosion (in Cahoot) as how else ca the profit from us even further. Totally Unacceptabel. rather have Cash on Collection where Possible etc…