EcommerceBytes-NewsFlash, Number 784 - June 17, 2004     2 of 5

eBay's PayPal Payment System Raises Bar for Merchants

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PayPal is making it harder for casual and low-volume sellers to qualify for its Merchant rate, and is lowering fees for high-volume sellers. eBay's online payment service PayPal announced it is changing its fee structure in August and is moving from a 2-rate system to a 4-rate system.

PayPal's standard pricing fees remain the same: 2.9% plus 30 cents for domestic transactions in the U.S. Prior to the pricing change, sellers could qualify for a lower Merchant rate of 2.2% plus 30 cents per transaction if they received an average of $1,000 in sales per month. Beginning in August, they must receive an average of at least $10,000 per month to qualify for a rate of 2.2%. Sellers averaging between $3,000 and $10,000 will qualify for a rate of 2.5% plus 30 cents per transaction.

High-volume sellers who receive over $100,000 in monthly receipts will qualify for a rate of 1.9% plus 30 cents per transaction.

Rates will be determined by the seller's previous month's transaction volume and will be based on country of residence instead of the currency received.

PayPal payment volume totaled $12.2 billion in 2003.

Note: PayPal stated that sellers currently paying the 2.2 percent rate will continue to do so for one year – they will not pay more in August. Because of the "grandfather clause" in the pricing change, no sellers will see an immediate rate increase.

https://www.paypal.com/us/cgi-bin/webscr?cmd=p/gen/fees-us-faqs-outside

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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