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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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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.

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