[Updated] PayPal very sneakily increases its charges and adds weird non-discouragement clause for sellers

Nobody likes to share bad news, and PayPal is no different. Price increases certainly fall into the category of bad news, and PayPal has decided to publish the details as "Policy Updates". But it's not just the price hike that's included in this misleadingly-titled document -- there's also something rather weird.

If you are a seller -- such as on eBay or other shopping sites -- you will soon be subject to a "non-discouragement clause". What does this mean? In short it means that sellers are not permitted to encourage shoppers to use another payment method instead of PayPal. Let's drill into the detail.

The intriguing new non-discouragement clause reads: "In representations to your customers or in public communications, you agree not to mischaracterize PayPal as a payment method. At all of your points of sale (in whatever form), you agree not to try to dissuade or inhibit your customers from using PayPal; and, if you enable your customers to pay you with PayPal, you agree to treat PayPal’s payment mark at least at par with other payment methods offered."

But it is the price increases that will be of interest to most people and will affect more users. The fee for currency conversion is jumping from 2.5 to 3.0 percent over PayPal's bank exchange rate. The standard transaction fee for sellers selling goods or services online to buyers outside the US increases from 3.9 to 4.4 percent, and non-US store transaction fees jump from 3.7 to 4.2 percent.

Other changes introduced by the Policy Updates include:

• We are removing the tier based fees we charge to nonprofits who receive payments from senders outside the U.S. and are charging a flat rate of 3.7 percent plus the existing fixed fee based on the currency for all such transactions.
• We are changing the micropayment fees for in store transactions received from buyers outside the U.S. from 6.0 percent to 6.5 percent plus the existing fixed fee based on the currency.
• We are clarifying that we will assess the $20.00 chargeback processing fee for sellers who win a chargeback but are not eligible for Seller Protection.
• We are adding the ability to create a negative balance in your PayPal account when we reverse a payment to cover eBay buyer protection claims that the seller loses.

PayPal Here is also in line for fee increases:

• We are changing the cross-border transactions fee for card present and PayPal transactions from 3.7 percent to 4.2 percent.
• We are changing the cross-border transaction fee for keyed and scanned transactions from 4.5 percent + $0.15 to 5.0 percent + $0.15.
• We are also adding pricing for verified charitable organizations that will match existing pricing for non-charities.

The changes take effect March 29, 2017.

Update

PayPal has been in touch with BetaNews to point out that the changes to its policy only affect customers in the US.

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