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Paypal's policies are quite constraining to foreign sellers, but we have to live with it Empty Paypal's policies are quite constraining to foreign sellers, but we have to live with it

on Thu Nov 29, 2018 8:58 pm
Every day I have to deal with the angst of buyer's who make a payment for their items, only to find I have to refund them.

Why is that?

Because Paypal requires the seller to send all shipments using a tracking method for 'Goods and Services' transactions.

Our Paypal account is a US account (because we have a legal US Bank account and it is attached to that), but we are located in Canada. The minimum cost to send 100g to the USA with tracking is $17.50. The cost to put some stamps on the same envelope and send it, is $2.50.

We can use that latter method if the buyer sends payment via 'Friends' or 'Friends and Family', but using this method to send funds is not straightforward for occasional Paypal users.

If you cannot send funds using the Paypal 'Friends and Family' option, then we cannot apply the discount to your order.

That is the primary reason, but here are some more:

Paypal requires sellers that reach a certain 'Goods and Services' transaction threshold to register with the IRS and fill our IRS tax forms, and potentially pay US taxes. (So we did register with the IRS and now have an EIN number.) This is in addition the the taxes I already pay in Canada for the Paypal US transactions that I profit from.

The way that PayPal makes money is by charging a 2.9% fee from the total amount of each payment. In addition, there is also a $0.30 flat fee on each transaction. This is for each transaction in the United States. Fees for foreign transactions may be higher. This fee is charged to the person receiving the money, not the person paying for the goods or services. This is similar to what happens every time you pay by card at a store. The store has to pay a fee for the “convenience” of being able to accept credit card payments. This fee has to be born by someone, so the seller must build this into the selling price, I have tried not to do this.

Gross Cost Example: I receive a $30.00 order that results in a 100g envelope to be shipped to the USA:
Goods and Services method: Shipping $17.50, Fees $1.17, Total: $18.67
Friends and Family Method: Shipping $2.50, Fees 0, Total: $2.50
So someone has to pick up the additional $16.17 that is going to Paypal and Canada Post, which represents more than 50% of the value of the original order. Clearly, the 'Goods and Services' method does not make sense for a $30.00 order.

In 2017 we were scammed by a buyer in the USA who said he did not authorize the order. When we filed the shipping images, and copies of email correspondence we had with the buyer to prove we had sent the order, Paypal denied our claim because we did not ship using a method that had tracking, and removed the payment amount from our account. Subsequent correspondence with the buyer indicated that after a few too many beers, he had contaminated part of his catalyst by soaking it in naphtha in order to get it to light, and destroyed the other part by trying to stuff it into a head with pliers. His feeling was we should have warned him not to do that in advance.

Ironically, the tracking method takes longer to reach the buyer than an envelope with stamps, probably because the latter does not have to go into a different processing queue to be scanned at each postal facility it enters.

Why not use 'Friends' or 'Friends and Family'?
- If you do not trust the seller. When you send funds using this method, you do not get the Paypal buyer protection. If there is a problem with your order, you have to trust that I will make it right. (If you soak your catalyst in naphtha, that is unlikely to happen).

In spite of spending hours writing up all the details on this page on our website, more than half the payments still come through where the buyer applies the discount, but pays for "Friends and Family". I then have to send a refund, which I also have to pay a fee for, so I take a net loss every time I do this. Eventually, I will have to pass this extra cost onto the buyers in the form of higher prices.

Paypal makes it difficult on purpose to make a payment using "Friends and Family", but it is possible. The people who seem to have problems in this regard are generally new to online buying, EG: Baby Boomers such as myself, and I feel your pain, but there's not much I can do to alleviate it beyond making up the detailed set of instructions on our website to walk you through the process. But it does take time, and that's something that we seem to be in increasingly short supply of. One thing that I can reliably predict however, if you do not follow the instructions on a step by step basis, I will not be able to fill your order. That means you have wasted all your time filling in the order form, and I will have to pay a fee to refund your money. For both our sakes, if you do not have the time to follow through all the painful instructions for achieving a "Friends and Family" payment, it would be best to make other arrangements for keeping your hands warm.
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