The Rowe Family Blog

I recently became an eBay seller. It is nearly a necessity to use Paypal if you buy or sell on eBay. I’m very unhappy with Paypal. I find them to be incredibly deceitful.

Paypal has a couple different account types. One type is a Personal account which is free. The limits of the personal account are in the number of credit card payments you can accept and a monetary limit on the transactions. They charge you about 5% for accepting credit card payments. They also limit the number of credit card payments and and the total amount of money you can accept in a given time period. I find this to be reasonable. If you wish to accept more credit card payments or do a higher volume then a different account type is available, the Premier account.

A Premier account is basically free except that all incoming payments are charged at about 3%. This could be a payment directly from another Paypal customer or from a credit card. There are no limits on the amount of transactions and there are no limits on the number of credit card payments. Every payment you accept costs you about 3% whether it is a credit card payment or a simple paypal transfer. Who would want this type of account when a Personal account is free? That’s right, no one. Well, unless you sell a ton of stuff on eBay and you expect to take a lot of credit card payments or perhaps if you wish to accept payments from some sort of online store.

This all sounds very reasonable until you try to use Paypal. The major problem I have has to do with eBay auctions. If you mark an auction “Paypal preferred” (or something like that) then eBay puts credit card logos on your auction. It is against eBay’s rules to disallow credit card payments if this is the case. You can specify your own payment terms if you omit all of the paypal stuff but generally speaking eBay pushes Paypal. Why wouldn’t they, they own Paypal! Here’s the major kicker; if a buyer sends a credit card payment to your peronsal account from an eBay transaction you as a seller are not allowed to deny the payment in your paypal account! Even worse is that you must change (I won’t say “upgrade” like they do) to a Premier account to accept the payment. But wait, didn’t I say you could accept credit card payments on a Personal account? Yes, you can but not if it’s from an eBay auction. This is not specified in their fees matrix. That is deceptive and unethical and it doesn’t end there. Once you have a premier account it’s nearly impossible to change the account back to a Personal account. They used to allow you to change an account one time back to a Personal account by selecting an option hidden inside their “contact us” form. That is gone. Now they have an option to “change account type.” If you select that it drops your request saying “you already have a Premier account.” They do everything in their power to prevent you from downgrading. Try searching their help system for “downgrade.” You won’t find much. You’ll find some misleading information on why they think you shouldn’t downgrade. You’ll find that you can only downgrade once. Under an FAQ that says “How do I downgrade my account?” they tell you why they think you shouldn’t but never will they say how to downgrade the account. It would be trivial for them to offer a downgrade option on their online menus but they do not do this because they do not want people to downgrade.

I eventually became incredibly frustrated with their online help system and tried to call a human. Hah! They hide their toll free number. If you Google you can find it but in my case, as a cell phone user, that wasn’t important to me. Itt is an indicator of a company that is far from focused on customer service though. After waiting for more than 30 minutes on hold I was told there was nothing I could do. I had payments from multiple auctions coming in and I could either accept the payments and forever become a Premier account holder or I could ask the buyers to cancel their credit card payments and resubmit payments to either a different account or to not pay with credit card. There are multiple problems with that. First, I’m a new seller on eBay. I’m trying to build a reputation. I care about customer service, unlike Paypal. The second problem is that if you create a second you can’t link it to the same bank account! Luckily I have two bank accounts that have free ACH transfers.

Ideally I would have one Premier account to use on eBay and a Personal account to accept money from friends. Recently I’ve wanted to electronically accept money from friends and this is exactly what a personal account is supposed to be for. However because I was deceived into upgrading to a Premier account for both the account I used with eBay, and unintentionally, with my second account I now have two Personal accounts. Once my current eBay auctions conclude I may suffer through another 30 minutes of hold time to change what should be my Personal account back to a Personal account.

Since eBay owns Paypal they get a double cut every time a Premier account holder makes a sale. eBay takes a very valid cut on the sale and then Paypal get another 3%. eBay and Paypal has no incentive to change their practices. Until people get fed up with Paypal and launch an alternative there will be only Paypal. The trouble is that eBay, I expect, would make it excessively difficult for a competing payment company to compete with Paypal. This is a huge conflict of interest but I do not know of anything comparable to Paypal to send and receive payments.

Paypal provides a very valid and useful service. My complaints lie in the deceptive way that they do their business. They should not claim that they are free (see the deceptive fee matrix) when they are not. I would much prefer to pay a reasonable fee on every incoming payment. As long as it was made clear that there was a fee and that fee was reasonable then I would not have a problem paying it. Forcing me into a payment option which I can almost never change is not a good way to do business long term.

Update:  Tech Consumer has a good post about Paypal which is similar to mine.