Print 28 comment(s) - last by Alexvrb.. on Mar 25 at 12:58 AM

PayPal will undoubtedly pass new fees on to its customers

One thing every user of PayPal is certainly familiar with its fees. It now looks as though the company famous for its user fees will have the tables turned. Visa CEO Charlie Scharf recently suggested that the credit card company could impose a fee on digital wallet operators such as PayPal.

MasterCard has already announced it plans to charge a fee to digital wallet operators starting in June. Fears that other major credit card operators could start charging PayPal fees for transactions have hurt PayPal shares. PayPal currently pays standard credit card fees to Visa and MasterCard, as well as American Express. These fees are paid whenever a PayPal purchase is made with a credit card bearing one of the companies’ logos.

The new fees that are being considered are in addition to these standard credit card fees.

During the Barclays Emerging Payments Forum this week, Scharf said, "I think it is totally appropriate to do that."
PayPal has been making a big push into the retail market allowing users to pay for items in stores using their PayPal account. Some analysts believe that as a payment option in physical stores PayPal could be a threat to major credit card networks such as MasterCard, Visa, and American Express.

Yesterday, eBay announced that it was reducing its fees in an effort to better compete with While PayPal has yet to announce a fee increase, if PayPal begins getting charged more for transactions it would undoubtedly raise fees for customers.

Source: Reuters

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By MadMan007 on 3/21/2013 1:43:00 PM , Rating: 3
Sounds like this will result in an anti-competitive lawsuit or investigation pretty quickly, especially if it applies only to Paypal. Will it apply to other 'digital wallet' systems like Google Wallet?

RE: lawsuit
By GulWestfale on 3/21/2013 2:00:34 PM , Rating: 5
it won't apply to apple, as apple invented digital wallets and therefore owns all patents on all types of digital transactions made by anyone in the world.

and thus, visa actually owes apple 1 billion dollars, plus maybe some starbucks coupons.

RE: lawsuit
By Richlet on 3/21/2013 2:34:07 PM , Rating: 2
it won't apply to apple, as apple invented digital wallets and therefore owns all patents on all types of digital transactions made by anyone in the world. and thus, visa actually owes apple 1 billion dollars, plus maybe some starbucks coupons.


RE: lawsuit
By Tony Swash on 3/21/2013 8:23:58 PM , Rating: 1
Jeez you guys are really getting a bit deranged about Apple aren't you? This article isn't about Apple, but I suppose for you Apple obsessives everything is about Apple. The company must scare you a lot I suppose, which is a bit sad really. You do need to get a grip before you become seriously unhinged.

RE: lawsuit
By chekk4 on 3/21/2013 11:47:52 PM , Rating: 2
I prefer "demented". "Deranged" sounds like a ranching term.
"Bubba, go get them cattle deranged."

RE: lawsuit
By FaaR on 3/22/2013 8:31:23 AM , Rating: 5
You don't want your cattle deranged. That would make them mad cows... ;P

RE: lawsuit
By Cheesew1z69 on 3/22/2013 11:53:47 AM , Rating: 1
everything is about Apple.
Says the biggest Apple loser on here.

RE: lawsuit
By sigmatau on 3/21/2013 8:08:02 PM , Rating: 2
It doesn't matter if it applies to Google Wallet as Visa (and MasterCard) have their own digital wallets. So since they won't be charging themselves an extra fee, they can't charge others.

Why the double fees?
By CarbonJoe on 3/21/2013 4:31:38 PM , Rating: 4
PayPal currently pays standard credit card fees to Visa and MasterCard, as well as American Express. These fees are paid whenever a PayPal purchase is made with a credit card bearing one of the companies’ logos.

The new fees that are being considered are in addition to these standard credit card fees.

Visa, etc., are already getting fees. Why the doubling up? They are fearing PayPal being used in retail stores, but if they fund their PayPal account from Visa, etc., they are already paid.

RE: Why the double fees?
By Solandri on 3/22/2013 5:46:58 AM , Rating: 2
Visa, etc., are already getting fees. Why the doubling up?

Because they can. To paraphrase one of my favorite books, the easiest way to make money is to move money around for other people, and skim a little off the top for yourself.

Visa et al know they have a good racket going. (Yes it's a racket. There's no way transmitting a few bytes of data to update a database costs ~2% of the money being exchanged. And don't get started about paying for fraud - the merchants bear the cost of fraud, not the credit card companies.) They're not going to stand for someone else trying to get in on it. It could lead to actual competition which could decrease their margins to something closer to the actual cost.

RE: Why the double fees?
By Mint on 3/23/2013 10:09:54 PM , Rating: 2
Merchants don't pay for all fraud. They only pay if they didn't follow the right procedures in collecting the necessary information.

Credit card companies also pay for default. Sure, some of that is paid for through interest, but interest and fees are all part of their revenue stream.

RE: Why the double fees?
By inperfectdarkness on 3/22/2013 8:09:22 AM , Rating: 2
Why are people complaining?

Simple. No one can actually afford anything anymore. People buy stuff on credit, and not with accrued funds in their bank account. People get so used to living on credit they forget that it might be possible to live by paying 100% up front for everything--if only they could reign in their consumer appetite.

Everything I've paid for on PP has been via bank for the last 2 years. I don't feel like feeding the credit-machine. Credit already has a stranglehold on the USA. All 17 trillion dollars worth.

RE: Why the double fees?
By Breathless on 3/22/2013 9:17:06 AM , Rating: 2
You are actually losing a sizable amount of money by doing your spending in this way. For instance, I use eBay for virtually everything that I buy (whenever its cheaper anyway). Using my eBay mastercard, I rack up crazy points in doing this. I basically on average make about $40 a month in the form of paypal cash from my eBay mastercard. This really adds up and helps mitigate expenses on things that I would be buying anyway (PC Parts for myself and my customers). I don't carry a balance, so its always paid off. Therefore, I'm not really feeding the credit machine. I'm using them for every dime they are worth.

RE: Why the double fees?
By inperfectdarkness on 3/22/2013 3:38:41 PM , Rating: 2
Depends on the type of transactions you are doing. If you're interacting with a party who will not "eat" the paypal fees, then you either have to pay them yourself, or use a bank account.

why do people use paypal?
By fic2 on 3/21/2013 5:59:24 PM , Rating: 2
I can understand using paypal where you have to - on ebay, but I would never trust paypal in a transaction dispute where I was shipped counterfeit dvds instead of the advertised real dvds. They screwed me once on that and I haven't used my paypal account since (or ebay for that matter).

RE: why do people use paypal?
By chick0n on 3/22/2013 2:24:02 AM , Rating: 2
you are stupid enough to buy "DVDS" on Fleabay

RE: why do people use paypal?
By cyberguyz on 3/22/2013 7:23:50 AM , Rating: 2
How much do you trust Joe's Online Crackerjack Factory or Sex Toys Unlimited's online store with keeping your credit card information out of hacker's hands?

I don't know about you but with all the money and security behind paypal, I would much rather have them hold my online funding information than give it to shady outfits that could very well sell it off to identity thieves for a nice tidy profit. I know that if my financial information gets leaked, I have one outfit that I need to sic my lawyers on.

Maybe you don't trust Paypal, but frankly I trust all these other online merchants (legit or otherwise) a whole lot less.

RE: why do people use paypal?
By jmke on 3/22/2013 9:37:20 AM , Rating: 2
better to have Paypal play middlemen on these small sites, than to have to enter your visa details on each of these small resellers online.

RE: why do people use paypal?
By Motoman on 3/22/2013 12:00:35 PM , Rating: 3
You are wrong * infinity.

Pay on any old website with your credit. Worst thing that happens is they hijack your card and go nuts charging things. You call the CC company, they cancel the card and all the charges, send you a new card with a new number, and it's over.

Do business with PayPal? For no apparent reason, they'll stop giving you access to your account, so you can't get to the funds you have in there. They'll steal money from your account to give to any eBay buyers you may have done business with when they fraudulently file claims against you. They might even ban you for life without even giving you any excuse at all.

In the end, you have *awesome* consumer protections through your credit card. You have none through PayPal - especially in the interest of protection from PayPal themselves.

RE: why do people use paypal?
By Alexvrb on 3/25/2013 12:58:56 AM , Rating: 1
I've dealt with card fraud before, some time ago. It's frustrating, especially if it's your bank card. It's even worse if you go to use your card one day and it doesn't work (awkward!) because your account has been cleaned out! You have to waste your time dealing with the fraud department, going over all the bad charges. There's paperwork, too. Then, you're cardless for a while, and your replacement is a different number. So you have to update info for all the services that you DO trust to rely on your card for payments/transactions.

The process is not particularly fun. For someone to simply say "Oh it's fine if they go nuts charging things, you can just cancel the card and get your funds returned!" this says to me that you've never had to do this. Plus the issue isn't only that these random companies are unreliable and overcharge you. Another problem is that they don't have good security (well neither does Sony), and if you give every Tom, Dick, and Harry your info, sooner or later it'll fall into the wrong hands.

For buyers Paypal is generally pretty decent. I don't think Visa would better protect me from a bad seller. Of course, if you think it will help your argument, keep on using the seller angle. I'm sure the burnt buyers and other victims of fraud are sure to care.

The bigger issue...
By Motoman on 3/22/2013 10:10:48 AM , Rating: 2 that PayPal says it's not a bank, and therefore doesn't have to play by the rules that govern the banking industry.

Let's think about PayPal you can:
1. Have accounts
2. Make deposits into those accounts
3. Make withdrawals from those accounts
4. Earn interest on those accounts.
5. Get a debit card.
6. Get a credit card.
7. Get a loan (the Bill Me Later line of credit).

...and now you can even frequently use your PayPal account to buy things in actual stores.

How then, exactly, is PayPal not a bank? Because I'm pretty sure that's what banks do.

As for anyone who thinks PayPal is adding any kind of "security" to their transactions...I can't even begin to comprehend the depth of your ignorance. PayPal is, in and of themselves, the least trustworthy company on the planet. With PayPal, issues with the people you buy things from isn't the primary's protecting yourself from PayPal.

RE: The bigger issue...
By Yeah on 3/22/2013 1:49:52 PM , Rating: 2
Sorry Motoman but .. your wrong- PayPal is not a bank even though at one time they tried to be one.

What (US)bank lets you open a personal account without having you walk in and talk to someone about opening an account.

What credit card company will give you a merchant account without charging you a monthly fee?

Pretty sure you wont find one.

PayPal may ACT like a bank but better. There are no fees to transfer paypal funds from one account to another unless you are paying by credit card or over a certain amount.

PayPal has many electronic ' filters ' to help deter fraud. Would you rather give some guy in australia your credit card number to buy a hand made ukelele or trust someone with a paypal account? PayPal was one of the first transaction type companies that allowed a seller to accept credit cards without needing to have a merchant account. Your a flippin idiot if you think PayPal is some kind of bad company. They do more to try and help you with transactions than a bank could because they operate in real time.

Yes.. I used to work for PayPal.. you must have gotten burned by someone because of a transaction on eBay or something.

PayPal will hold your money in thier system much like you giving your money to somone else to hold onto to be a middle man for a purchase.

RE: The bigger issue...
By Motoman on 3/22/2013 3:27:55 PM , Rating: 1
Yes.. I used to work for PayPal

...then you're evil and your opinions are irrelevant.

Your points are...pointless. Everything PayPal does demonstrates it's function as a bank...period. There is no possible way out of that.

And by the way, those "filters" you think so highly of? They're BS, and more often than not are used as an excuse to lock a legitimate user out of his account.

Anyone with half a brain in their heads would be INFINITELY more inclined to buy something with their CC directly, for the reason I posted above - fixing a problem with your CC is easy-peasy, and essentially instantaneous. Any allegations that PayPal will "do more to try and help you with transactions than a bank could" are outright lies. This I guarantee.

Now STFU and GTFO you shill.

Empty Threat
By Yeah on 3/22/2013 9:43:44 AM , Rating: 2
I think this is just an empty threat from some of the CC companies. They make MILLIONS of dollars off of us daily. Remember not too long ago they got in trouble for changing when your payment was due without notifying you so that the next time you went to make a payment like you may have in a previous month the payment was already late -- woops late fee. Yeah CC companies are dirty dirty players. Now- when I get a credit card statment the payment due date doesn't change, but I dont get the bill until like 2 days before its due how many of you does this happen to? I think PayPal is probably Rofl'ing right now about this threat because I could see a huge lawsuit coming from PayPal/eBay. And Google.

disclaimer: < I used to work for paypal- (still think its a great company) >

RE: Empty Threat
By MadMan007 on 3/22/2013 12:07:38 PM , Rating: 2
It's not Visa or Mastercard doing things like shady billing practices, it's the issuing financial institution. Visa and MC do not issue accounts directly.

Biting the hand that feeds you.
By cyberguyz on 3/22/2013 7:37:24 AM , Rating: 2
Think about it. Credit card companies get huge amounts of profits from wallet companies like Paypal and Google. Turning around and hitting these huge income sources with this "wallet fee", will only cause them to pass it on to consumers. And what do these folks think will happen if consumers start seeing that buying things without a wallet service is far cheaper than using one?

People stop using these digital wallet services and go back to less secure, but cheaper methods of online purchases. or worse yet, they think twice about making that purchase in the first place.

So who wins with this brainwave? I see only 2 losers here:

1. Digital wallet services as people stop using them.
2. Credit card companies as the income from these digital wallets dries up.
3. Credit card companies get a double-whammy as some of those people who would have made that impulse purchase via the digital wallet now gives second thoughts about the purchase and decides against it for cost and security reasons.

By toyotabedzrock on 3/22/2013 11:33:53 AM , Rating: 2
Wouldn't than run afoul of the law limiting fees?

By Darksurf on 3/22/2013 4:03:38 PM , Rating: 2
Looks like I'll be using paypal and Google Wallet linked directly to my bank account now. Visa, you really screwed up this time.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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