Passing on PayPal fees / "convenience tax"

[19ninety]

Should the retailer foot the bill for the customers convenience of using PayPal? I say convenience tax as it seems people prefer to click through checkout and use PayPal rather than enter their credit card details on a single checkout page. I get that PayPal has built a reputation for being safe & secure, etc.

Does anyone pass on their PayPal fees to the customer, such as adding the percentage to the customer cart at checkout if PayPal is used?

 

[ServWise]

It is actually not allowed in PayPal terms of service to charge extra for using paypal. Some retailers do still do though by calling it something else.

 

[WebshopMechanic]

@19ninety

I don't know of any retailer that passes on PayPal fees to the customer. Ticket sales companies do this for credit cards and it 'gets my goat'!

I appreciate what you are saying that it's a convenience tax but you are also facilitating a sale with a customer of a product that you want to sell. If you pass on the fees then it's likely that you will lose more sales because people will not like it.

The best way forward would be to build the fee into your pricing. I also urge this with postage if you can because it will help you to convert more sales.

With the rise and domination of Amazon with its free shipping and even free same-day Prime Shipping, small retailers need to do everything in their arsenal to compete. If you add in extra charges then you will only antagonise your customers and they will go somewhere else.

Remember, they have so many choices where they can buy the product. You should be honoured they've chosen you. You should treat every customer and every sale like royalty.

Sorry if I sound 'preachy' but I see far too many small businesses treating a sale like an inconvenience. If they started to really appreciate their customers a little more, they would find themselves in a far better situation financially instead of panicking about where the next sale is coming from.

Matt

 

[fisicx]

You can add a processing fee with PayPal - it's called a 'handling charge'

https://developer.paypal.com/docs/c..._htmlvariables/#payment-transaction-variables

 

[19ninety]

@19ninety

I don't know of any retailer that passes on PayPal fees to the customer. Ticket sales companies do this for credit cards and it 'gets my goat'!

I appreciate what you are saying that it's a convenience tax but you are also facilitating a sale with a customer of a product that you want to sell. If you pass on the fees then it's likely that you will lose more sales because people will not like it.

The best way forward would be to build the fee into your pricing. I also urge this with postage if you can because it will help you to convert more sales.

With the rise and domination of Amazon with its free shipping and even free same-day Prime Shipping, small retailers need to do everything in their arsenal to compete. If you add in extra charges then you will only antagonise your customers and they will go somewhere else.

Remember, they have so many choices where they can buy the product. You should be honoured they've chosen you. You should treat every customer and every sale like royalty.

Sorry if I sound 'preachy' but I see far too many small businesses treating a sale like an inconvenience. If they started to really appreciate their customers a little more, they would find themselves in a far better situation financially instead of panicking about where the next sale is coming from.

Matt

Not at all, I wouldn't have posted this for discussion if I didn't want to hear peoples thoughts. I'm enormously grateful of every customer who chooses to shop with my company, the feedback I get from them is always highly positive of their experience as a whole.
I only started to accept PayPal again to facilitate faster repaying of a Working Capital loan, otherwise I would have stuck to accepting only card payments which don't cost me anything.
On enabling PayPal I noticed that roughly half the order placed were paid for using PayPal, I had thought about your suggestion of building that expense in to the product price, but then it seems unfair to card paying customers and also pushes the product price above my competition.

Just to add, I'm quite particular about my inventory, the majority of the products I stock aren't available on Amazon, and only a few on eBay, my largest competitors are companies who run ecommerce website rather than marketplace chumps.

You can add a processing fee with PayPal - it's called a 'handling charge'

https://developer.paypal.com/docs/c..._htmlvariables/#payment-transaction-variables

Ah thanks.
By the way I wouldn't have called it convenience tax on the check out if I did implement it, that would be bonkers!!

 

[Mr D]

Its usually simpler to cover all costs with the pricing you set. So factor in the paypal costs you get in a year into pricing set so the buyer pays the costs not you paying the costs.
Same way you do with all the other costs you have that the buyer doesn't see.

 

[fisicx]

I've just checked and it's now called 'shipping and handling' and it's a combined charge.

 

[KAC]

Pet Drugs Online have an "additional charge of 2.5%" for paypal

Paying by PayPal incurs an additional cost of 2.5%. You can avoid this by selecting the credit/debit card option above

 

[19ninety]

@KAC that's what I was thinking of displaying.

 

[Jeff FV]

But as of 13 Jan 2018 it will be illegal to add on a surcharge for payment method (includes PayPal as well as credit cards)

 

[Mr D]

But as of 13 Jan 2018 it will be illegal to add on a surcharge for payment method (includes PayPal as well as credit cards)

Is this only illegal between certain dates? Say 13th Jan 2018 to 31st March 2019? Or longer?

 

[Alan]

When I used to do e-commerce - when I added a Paypal Express button, my conversions went up 10% which was well worth the minor cost uptick.

Pet Drugs Online have an "additional charge of 2.5%" for paypal

My dogs actually need quite a lot of drugs as they are getting on, and if I saw the above surcharge, I would immediately jump back to Google to cross check pricing on other sites - fickle us internet shoppers. So the impact of publishing a surcharge is to create a barrier to conversion that may result in the customer abandoning their cart. Well worth checking the analytics for abandonment rates prior to and after deciding to make such a change in my opinion.

 

[KAC]

My dogs actually need quite a lot of drugs as they are getting on, and if I saw the above surcharge, I would immediately jump back to Google to cross check pricing on other sites - fickle us internet shoppers. So the impact of publishing a surcharge is to create a barrier to conversion that may result in the customer abandoning their cart. Well worth checking the analytics for abandonment rates prior to and after deciding to make such a change in my opinion.

To be honest, I'm in the same boat with 2 chocolate Labradors one of whom is 14. I tend to make a decision on how much I'm spending and whether the uplift is sufficient to get me out of my chair to get the credit card

 

[WebshopMechanic]

Hey @19ninety

One other thing. I know the charges may be a bitter pill to swallow but PayPal claim to increase your conversions by 3% using it's payment method and logos. I've actually seen uplift with my clients too.

Check it out here: https://www.paypal.com/uk/webapps/mpp/business-updates/checkout-optimisation

Matt

 

[Coari]

Parcel2go adding 2% surcharge when you pay them using paypal.

 

[Jeff FV]

Earlier in the week I taxed my car online via a .gov website.

They are still imposing a fee if you use your credit card (not debit card)

But come Jan 18, .gov, parcel2go, and anyone else will not be able to add these charges

 

[Mr D]

Earlier in the week I taxed my car online via a .gov website.

They are still imposing a fee if you use your credit card (not debit card)

But come Jan 18, .gov, parcel2go, and anyone else will not be able to add these charges

Not add them separately.
Adding them into the price for everyone.... ?

 

[Ian J]

Earlier in the week I taxed my car online via a .gov website.

They are still imposing a fee if you use your credit card (not debit card)

But come Jan 18, .gov, parcel2go, and anyone else will not be able to add these charges

The airlines used to be the worst culprits but many of them have already scrapped the charge

 

[wayzgoose]

Booking theatre tickets is another one where they like to add a "processing fee" - cheeky buggers ! And I think you should absorb the cost, would put me off.

 

[pelparc]

But come Jan 18, .gov, parcel2go, and anyone else will not be able to add these charges

Is this ban on additional charges for consumers only or does it extend to business transactions as well?

Personally i dislike the additional charges and it leave a feeling of being ripped off. Yes business have lost my purchase because of it.

 

[Jeff FV]

Is this ban on additional charges for consumers only or does it extend to business transactions as well?

Personally i dislike the additional charges and it leave a feeling of being ripped off. Yes business have lost my purchase because of it.

"The rules will apply to any UK company which is selling to UK consumers" [source]

so, unfortunately it will not extend to business transactions.


@Mr D although this is in response to an EU directive, it will be written into UK Law, so should exist beyond, say 31st March 2019. (i.e. it is Brexit proof)

 

[Mr D]

But could be withdrawn from uk at some future point, presuming we do not reapply to join EU?

 

[CompuGlobal-Hyper-MegaNet]

they should factor it in to the cost of doing business/the cost of sales. accepting cards isn't free, and PayPal can't be that much more than visa/mastercard.
I personally love the convenience of PayPal and when some sites have cumbersome and long sign up processes, I may opt for the short-cut - especially if on phone or in a rush
offering PayPal boosts sales for a number of reasons. they should fund the cost from their extra profits