PayPal rant. So, PayPal is kind of expensive. They charge me around 5.5% on transaction fees on average. 5.5% may not seem a lot at first sight. Think about this though:
Say that you’re a merchant operating with a 30% margin. You get stuff for 100 EUR and re-sell at 130 EUR. But of course you have to ship it. Say the shipping cost is 15 EUR and you’re not adding any margin on top of it. And you’re a VAT payer so you need to add the 21% VAT. At the end, you charge your customer (130 + 15) * 1.21 = 174.45 EUR.
You made 30 EUR on the sale. Or did you? Well, here’s the thing, the 5.5% that PayPal charges you is not calculated from the 30 EUR you have made (or more specifically, you wish you have made). It’s calculated from what you have charged. So it’s 174.45 * 0.055 = 9.65 EUR. So it has basically eaten a third of your earnings. In my country, that would be two times more than the income tax.
So yeah, 5.5% is quite a big deal, especially for some. Of course, this was just an example. I’m not trying to imply this is my situation. Just making the point that 5.5% is by far not what you could call negligible.
Now, my plan for the new e-shop was to accept credit card and PayPal payments and charge the transaction fee to the customer. That’s simply because I like to be transparent about things. I don’t want to pretend that it doesn’t matter how you pay. I currently get charged 2.3% for a card payments (it should converge to around 1.5% pretty quickly; fee is getting lower with more sales) and 5.5% for PayPal. It just seems fair to charge the customer less if they pay with the cheaper payment method.
Well, guess what. PayPal forbids you to do that. You’ll find this in their license agreement:
Of course they don’t want you to do that. They don’t want people to realize how much more expensive they actually are compared to other payment methods.
This is just ridiculous. And of course, you can’t not accept PayPal because for some reason everybody wants to pay by PayPal. People are just used to it or some may not have other options. So if you drop PayPal from your accepted payment method you loose a ton of sales.
Anyway, I’m increasing all my e-shop prices by 5.5%. If you can pay by a credit card, I invite you to do it. 4% discount will be applied at checkout upon selecting the credit card payment method.