hey_moe
August 19th, 2009, 15:23
PayPal has generated its fair share of controversies (http://arstechnica.com/security/news/2008/09/ebay-fuels-fires-of-resentment-with-new-paypal-only-policy.ars) over the years, but it has begun to stir up another one by adding new transaction fees that affect all customers—without telling anyone about them. The company slipped the fees in with a more general update to its "send money" service in June, but because the changes were so well hidden, the Internet has been slow to wake up to what amounts to a huge increase in PayPal's income.
Under the previous system, fees were charged based on the type of account the receiver was using as well as where the money was coming from. If the receiver was a premium or business account owner, he or she was charged 30¢ plus 2.9 percent of the transaction—the same applied to all accounts if the money was coming from a credit or debit card instead of a PayPal balance or directly from a bank account. People using personal accounts could make all these payments to anyone else for free.
In June, PayPal made a number of changes to its User Agreement and posted an update to the PayPal Blog. At that time, director of product marketing Heinz Waelchli wrote (https://www.thepaypalblog.com/2009/06/paypal-send-money-updates/) that PayPal had now begun allowing those with business and premium accounts to make personal transfers to friends and family for free. This, in itself, is a welcome update—I use my PayPal account to receive payments for items I sell on Etsy, but now I can send money to my brother from the same account without either of us having to give PayPal a cut.
What PayPal failed to do was inform users of the fact that any transfer having to do with goods or services will be charged the 3¢ + 2.9 percent fee no matter who or where it's coming from. This includes payments sent from personal accounts as well as payments made after someone has sent you a request for payment (even if that request has nothing to do with goods or services).
For example, a personal account sending another personal account money for a one-time payment for, say, mowing your lawn was not previously charged any fees on either side, but is now charged the usual transaction fee (the sender gets to decide who pays). The only way to avoid this is by selecting "gift" when making the transfer—something you can't do if you're following through on a purchase or invoice from someone. And, if you fall into this category (which many people do), it's likely that you had no idea about the changes until just now.
On the one hand, PayPal insists that it made the changes clear to customers via e-mail and a "formal notice" (aka legalese (https://www.paypal.com/us/cgi-bin/webscr?cmd=_update-policy&login_access=1249929184&login_access=1250691671) buried deep within the bowels of paypal.com and behind the login wall), but it only takes a bit (http://www.head-fi.org/forums/f11/paypal-fees-change-428028/) of digging (http://www.gadgetell.com/tech/comment/paypal-adds-new-fees-with-no-notice/) around (http://www.sitepoint.com/blogs/2009/08/19/paypal-doubles-fee/) to discover that this issue was obviously not clearly communicated at all. When pressed for a reason for being so quiet about the changes, PayPal PR manager Charlotte Hill told PC World (http://www.pcworld.com/article/169843/paypal_adds_fees_sneakily.html), "We didn't want to make a huge formal communication out of this pricing change, because we weren't really adding any fees, and we were hoping it would be a more useful experience for people."
Well, it appears as if the lack of a "huge formal communication" has now begun to anger users, as it comes off as a shady way to hide the addition of fees to mass numbers of transactions. Sure, users would have been irritated either way, but doesn't PayPal know that the way to handle bad PR is to be the first one to control the message? People value openness and transparency—especially when bad news is involved. Now, those controlling the message are other, ticked off users, and that won't be an easy one to clean up after.
Under the previous system, fees were charged based on the type of account the receiver was using as well as where the money was coming from. If the receiver was a premium or business account owner, he or she was charged 30¢ plus 2.9 percent of the transaction—the same applied to all accounts if the money was coming from a credit or debit card instead of a PayPal balance or directly from a bank account. People using personal accounts could make all these payments to anyone else for free.
In June, PayPal made a number of changes to its User Agreement and posted an update to the PayPal Blog. At that time, director of product marketing Heinz Waelchli wrote (https://www.thepaypalblog.com/2009/06/paypal-send-money-updates/) that PayPal had now begun allowing those with business and premium accounts to make personal transfers to friends and family for free. This, in itself, is a welcome update—I use my PayPal account to receive payments for items I sell on Etsy, but now I can send money to my brother from the same account without either of us having to give PayPal a cut.
What PayPal failed to do was inform users of the fact that any transfer having to do with goods or services will be charged the 3¢ + 2.9 percent fee no matter who or where it's coming from. This includes payments sent from personal accounts as well as payments made after someone has sent you a request for payment (even if that request has nothing to do with goods or services).
For example, a personal account sending another personal account money for a one-time payment for, say, mowing your lawn was not previously charged any fees on either side, but is now charged the usual transaction fee (the sender gets to decide who pays). The only way to avoid this is by selecting "gift" when making the transfer—something you can't do if you're following through on a purchase or invoice from someone. And, if you fall into this category (which many people do), it's likely that you had no idea about the changes until just now.
On the one hand, PayPal insists that it made the changes clear to customers via e-mail and a "formal notice" (aka legalese (https://www.paypal.com/us/cgi-bin/webscr?cmd=_update-policy&login_access=1249929184&login_access=1250691671) buried deep within the bowels of paypal.com and behind the login wall), but it only takes a bit (http://www.head-fi.org/forums/f11/paypal-fees-change-428028/) of digging (http://www.gadgetell.com/tech/comment/paypal-adds-new-fees-with-no-notice/) around (http://www.sitepoint.com/blogs/2009/08/19/paypal-doubles-fee/) to discover that this issue was obviously not clearly communicated at all. When pressed for a reason for being so quiet about the changes, PayPal PR manager Charlotte Hill told PC World (http://www.pcworld.com/article/169843/paypal_adds_fees_sneakily.html), "We didn't want to make a huge formal communication out of this pricing change, because we weren't really adding any fees, and we were hoping it would be a more useful experience for people."
Well, it appears as if the lack of a "huge formal communication" has now begun to anger users, as it comes off as a shady way to hide the addition of fees to mass numbers of transactions. Sure, users would have been irritated either way, but doesn't PayPal know that the way to handle bad PR is to be the first one to control the message? People value openness and transparency—especially when bad news is involved. Now, those controlling the message are other, ticked off users, and that won't be an easy one to clean up after.