July 14th, 2008 at 11:20 am
Unless you’ve been hiding under a rock these last few months or you are completely new to eBay then you will know that eBay Australia requires all sellers to offer PayPal as a payment option.
This policy requires you to sign up for a PayPal account if you wish to sell on eBay.
3 Types of PayPal accounts: which to choose?
- Personal Account: suitable for individuals that are mainly buyers and may only sell an item now and again.
- Premier Account: suitable for individuals that are selling regularly on eBay.
- Business Account: suitable for registered businesses that are selling regularly on eBay.
It is important to note that there is a marked difference in the fees charged between a Personal and a Premier/Business Account.
There is no difference in the fees charged between a Premier and a Business Account which is why you will see them referred to jointly as a Premier/Business Account.
For all accounts it is free to join, free to send money and free to withdraw funds over $150.00 AUD.
The difference between a Personal and a Premier/Business Account lies in the fees charged for accepting payments.
A Personal Account allows you to accept unlimited payments, free of charge, if funded by the payees:
- PayPal Balance,
- PayPal Instant Bank Transfer, or
- PayPal eCheque
However the sting comes when a payee funds his/her purchase with a credit or debit card. Holders of Personal accounts may accept a limit of 6 credit/debit card funded transactions per year:
- charged at a rate of 3.4% of the total payment plus $0.30 for every domestic payment.
- If your buyer is from overseas you are charged 4.4% plus an additional flat fee which depends on the currency the original payment is made with (please check the PayPal Fee Schedule for rates).
The thing is that you have absolutely no control over how your buyer funds their payment and you are not able to specify that you will only accept certain types of funded payments. This is an eBay policy - not a PayPal policy mind you.
What happens when you reach the limit of 6 payments funded by a credit/debit card?
Well as a PayPal user you have the ability to refuse payments funded by this source. You will receive an email from PayPal and you will be asked to either refuse the payment or upgrade to a Premier or Business Account (from which you can accept unlimited credit/debit card funded payments).
However, as an eBay seller, you must abide by eBay’s rules which specify that you cannot refuse a payment. So, even though PayPal gives you the right to refuse a payment, eBay does not. When you reach your limit with a Personal Account you will need to upgrade to a Premier/Business Account and accept the payment, there is no way around this.
The good thing about a Premier/Businss Account is that the fees for credit/debit card funded payments are significantly lower than with a Personal Account:
- domestic payments: 1.1% to 2.4% plus $0.30 AUD (depending on your sales volume - the rate lowers the more you sell
- international payments: 2.1% to 3.4% plus the applicable flat rate currency fee
The not-so-good thing is that now you are also charged the same rates for all payments regardless of how they are funded. Unfortunately, as the policy now stands you do not have the ability to control and try to limit your costs. You may start off with a Personal Account but once you reach that 6th buyer who wants to fund their PayPal purchase with their credit/debit card then you will be forced to upgrade to a Premier or Business Account.
Check the PayPal Fee Schedule.
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July 4th, 2008 at 9:24 am
In an announcement on the eBay AU site yesterday morning eBay informed us that they have decided to “withdraw” the notification in front of the ACCC which was asking for a special treatment in being allowed to enforce a PayPal only policy.
This will be a great relief to many people, buyers and sellers alike that were incensed by the proposed withdrawal of alternative payment options on the site. Although many people do choose to use PayPal as a payment option, there are many for whom other payment options fit in better with their business model or preferred method of paying for items over the internet.
I feel that this announcement is a win for common sense.
There is something though that still concerns me about the whole situation. The fact is, all sellers still must offer PayPal as an option. So even if the nature of your business model makes PayPal an nonviable option you are still forced to offer it and accept it if your customers choose to use it.
Of course sellers are now looking for ways to try to “encourage” other payment options. I wish to warn you to be very, very careful how you tread here. eBay is quite clear in its “Misleading and Discouraging Payments Policy” document:
“Sellers who state in their listing (in the “Payment Details” section) that they accept certain payment methods must not selectively offer those payment methods to buyers or discourage buyers from using those payment methods.
This means that sellers must always accept payment from buyers through the payment methods they have selected in their Payment Details section of their listing, and must not act in any way to discourage buyers from paying by these methods.”
eBay will not take too kindly to you actively discouraging bidders from using PayPal even by you stating how much the fees impact on your profits.
However there is one strategy that I believe is valid. In all of my listings where I accept personal cheque I always state that the item will be shipped after the payment has been received and cleared into my bank account. As everyone knows it can take a couple of working days for a cheque to clear. It is very rare that I receive a cheque for payment of an item as many people like immediacy.
Many people pay with PayPal because they see it as an immediate payment. However, for you PayPal is not necessarily immediate. It is there in your PayPal account but it can still take up to 5-7 days after you have requested a transfer for it to show up in your own bank account. Thus I believe that you can legitimately state that the item will not be shipped until the money has been cleared into your own bank account. This in itself may “encourage” some buyers to pay directly into your bank account if they want to expediate the delivery process.
Be aware though, if you decide to implement this policy that PayPal charges you a fee for withdrawing amounts under $150.00
I’ll be writing another post on PayPal soon and some of the issues that you need to be aware of as a seller. Til then, feel free to leave a comment below on your views of this whole situation.
June 27th, 2008 at 12:02 pm
It has only been fairly recently that eBay updated its SYI form to include a postage calculator. Now, when you use the SYI form, you simply add the weight, dimensions and handling charges and it automatically calculates the appropriate Australia Post parcel rates based on the potential bidders location.
Having this feature available is good for business in a couple of ways, it means:
- people know the total cost up front. They no longer have to email you for a quote, which may have turned off potential bidders who could not be bothered or did not have enough time before the auction ended.
- you are not short-changing yourself. Many sellers used to offer a flat rate which may have been lower than the actual shipping cost if, for example, the winning bidder was from the other side of the country.
- you are not overcharging your customer. Again a problem with a flat rate is that in an effort to not short-change yourself, you may have over-charged if the winning bidder was located in the suburb next to you. Many would see this as compensation for previous losses but your customer would not see it this way and you may have received a poor DSR rating for shipping costs or even a negative feedback comment.
But of course, all of this is purely academic now because eBay has their new postage calculator. Right?
Well what happens if you are using a third party auction management solution like Auctiva? Auctiva does not have an integrated postage calculator. Again, it seems as if you are faced with the above choices unless you choose one of the following work around solutions:
Continue Reading »
June 26th, 2008 at 9:51 pm
Are you going to be in Sydney on the 30th of June? The ACCC has been asked to hold a “pre-decision” conference to which all interested parties are invited to attend.
A pre-decision conference is a public meeting to which all parties that may have an interest
regarding the notification are invited. Conferences are conducted informally, without the
participation of legal or other professional advisers.
The conference will be held at the Maritime Museum in Darling Harbour, Sydney at 1:30pm. If you wish to attend you must first notify the ACCC of your intention by 12pm Friday the 27th of June. Check this PDF for more details.
Hopefully the issue will be finalised soon.
June 26th, 2008 at 9:46 pm
After the draft announcement by the ACCC stating that eBay will not be given permission to institute its PayPal only policy, eBay was still hopeful of getting a decision in its favour.
This was evidenced by its original response to the announcement, dated 13th of June:
“eBay intends to work with the ACCC and hopes to achieve a final outcome which has the safety and security of eBay’s members as its paramount objective. eBay will delay the removal of other payment methods from the site until Tuesday 15 July.”
So anytime that you visited the site you have been reminded that this is only a slight delay. Once eBay, with all its meaningless assertions about promoting consumer safety gets it through the ACCC’s thick skull, then everything will be all right and the policy will by implemented as planned by the 15th of July.
But it seems as if someone has had a word in eBay’s ear about being a little too overconfident.
Today eBay made another announcement:
“Changes to eBay.com.au scheduled for 15 July are being postponed until the review process with the Australian Competition and Consumer Commission (ACCC) regarding its recent draft notice is complete. As previously announced, eBay.com.au is continuing to work with the ACCC to achieve an outcome that benefits buyers and sellers.” and,
“Please note that some of our onsite communications may still refer to changes taking place on 15 July 2008. These communications are in the process of being updated.”
I wonder if they are finally seeing the light that their little plan is doomed. I wonder what will happen next?
