Attention entrepreneurs: the Paypal refund policy has recently changed and it will most likely affect you if you use their service. The changes to PayPal’s refund policy were announced a few months back and officially took effect on May 7.
While the changes seem minor to someone like me that has not yet given a refund on PayPal, there are a ton of entrepreneurs that are upset about the changes. And I totally get why.
What Is Paypal Changing?
As of May 7, when you issue a refund on PayPal, the company will keep the initial transaction fee instead of refunding it.
Prior to the change, when you made a refund on PayPal, the company would return the 2.9% seller’s transaction fee as well. This change affects all refund transactions, whether they are full or partial refunds.
Why Does It Matter?
Whether this change in the PayPal refund policy affects you and your business directly really depends on the volume of refunds that you issue customers.
For someone like me, personally, I have never issued a refund in all of my years of using PayPal the issue is of little concern. Because I provide services instead of products, refunds are a rarer feat. While not impossible, they are less likely.
However, if you are a business owner or entrepreneur that does issue frequent refunds, this change is much more likely to cost you something long-term.
Can You Avoid The PayPal Refund Policy Change?
The bottom line is that if you don’t like the new Paypal refund policy, you’ll have to cancel your account to avoid it.
The company issued a statement that users who cancelled their account prior to May 7 would not be affected by the change. But if you still have your account today, any refund that you issue—full or partial—will be affected.
What Should I Do?
In my humble opinion, this is the cost of doing business. There are other online payment systems that have similar policies and probably some out there that don’t (though I can’t think of any off the top of my head).
If you aren’t ready to move off PayPal—customers trust it and it’s easy to use—then you’ll have to find another way to make up the cost. The most obvious answer in my mind would be to slightly adjust product and service prices to compensate for future losses.
As business owners and entrepreneurs, we need to adapt to changes for the services we typically use and respond in a manner that serves us and our businesses the best. It’s your business and your choice!
What do you think about the new PayPal refund policy change?
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Tae started out as a journalist before following the money into the corporate world. But it turns out that the grass isn’t always greener and now you can find her spending most of her time writing about all the things she loves. Namely, money, travel and business with a hefty dose of self-deprecating humor. She is a podcast fanatic, blogging aficionado and loves to find new ways to turn passions into cold hard cash!