Monday, October 20, 2008

PayPal Competitive Offer? Yes, but . . .

This week the policy change requiring all payments on eBay to be electronic takes effect. The press release from October 7th made it clear that ProPay would be no alternative to PayPal on eBay for any sellers below Silver PowerSeller status. Quote from ProPay's website:

Currently, the ProPay eAuction account is exclusively for US-based eBay Silver, Gold, Platinum, and Titanium PowerSellers.

Smaller sellers or sellers who have higher volume with low Average Sales Price (ASP) items are used to only seeing the stick from eBay. All the carrots this year have gone to PowerSellers. Now lower level PowerSellers are losing the carrot. Once again while all are equal, some are more equal than others.

A second press release dated October 19th states ProPay's transaction rates are scaled to PS status:

  • Silver -- 2.7% and $0.30 USD per transaction

  • Gold and Platinum -- 2.4% and $0.30 USD per transaction

Titanium level sellers are encouraged to contact ProPay direct to set up custom transaction fees.

I have one major question for the seller who plans on using ProPay.

Are you comfortable with the possibility of losing your payment processor if your PS status drops and/or paying increased fees?

Quietly, with very little fanfare from PayPal labs comes an interesting new offering designed for processing micro-payments. The formula is the familiar decrease on front end with an adjustment in the percentage rate. Also familiar is the confusing language and charts to explain terms. The transaction fee drops to 5c from 30c and correspondingly the percentage rises from 2.9% to 5%.

The tipping point, or transaction size at which the micro-payment plan costs more than the regular PayPal plan is $12. Payments under $12 will save on the micro plan. See the chart here.

The drawback is that you have to choose between the micro-payment program and a regular account. This program might be of value to sellers who are

  • (a) willing to go through the hassle of opening a second PayPal account which requires a 'fresh' credit card that does not appear on your main PayPal account, and
  • (b) are able to split their business into total transaction under $12 and the over $12 transaction groups with separate payment processing.

Remember that for PayPal it is the total transaction being processed that pays fees, including shipping, not just the sale price.

Y'all come back!

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Anonymous said...

I am so DONE with ebay/Paypal's deceitful manipulations of it's users, the media, politicians, analysts and ebay stockholders!

PLEASE do an internet search of "Ebay Stockholders and Sellers Calling For Immediate Termination of John Donohoe CEO"


Debbie Levitt said...

Hey, H. Did you ask ProPay about this? I did.

I am very under the impression that you are NOT going to lose your rates if your PS status changes.

I think it would be best if you checked on these things before blasting these companies for things they haven't even done!

TheBrewsNews said...

Debbie, I am not H. but I'll respond anyway (and hope that H. won't mind me jumping in)....

Debbie, your "impression" is incorrect. When I spoke with a ProPay rep today I was tolda that ProPay accounts WILL automatically be evaluated on a yearly basis (Powerseller status) to determine the rates. Any seller who INCREASES their Powerseller status can REQUEST a review before the scheduled yearly review.

Perhaps you and I spoke to different people at ProPay, could that be it?

Henrietta said...


I really don't think there is anything deceitful in PayPals micro-payment plan. It is a good option for those who sell single iems with low ASP.

No the person who wrote the copy is not particularly clear and neither is the chart but if you read it often enough it makes sense.

It quite clearly states that cross border trading will raise the percentage rate by 1% and that foreign exchange fees will apply but this applies to a standard PayPal account also.

Henrietta said...

Debbie, with all due respect I think you are more in the habit of blasting publicly than I am.

Yes I did check.

That said, there is absolutely nothing disrespectful to ProPay in my post. Quite the contrary. ProPay have worked very hard to come up with a plan for eBay sellers which should be mutually advantageous and is infinitely superior to what they were offering earlier this year.

The ProPay eAuction plan is a special deal directly tied to seller status on eBay. If on evaluation you no longer qualify, either because of DSRs, (losing PS because of one below permitted level) or volume you will have to move to a different plan.

Kevin_T said...

Quote: "foreign exchange fees will apply but this applies to a standard PayPal account also."

Last time I looked at the user agreement PayPal's foreign exchange fees were 2.5% above market rate. When I first joined PayPal they were worded less specifically so that they could take what they wanted (it mostly appeared to work out at about 3.5% at that stage, so the set fee is an improvement).

Assuming the set fee is still 2.5%, if I sell an item in US dollars to a UK buyer, and our default currency is Australian dollars and British pounds respectively, PayPal "earns" 2.5% extra on both sides of the transaction unless either party is using a US dollar balance and not converting it back into (or from) their own currency. Thus PayPal gets 5% above standard fees per transaction, from some international sales.

This is not a critique, just an explanation if anyone is not aware of the actual charges or methodology. For many people this will be the cheapest way of doing this nature of international trading, but it may add to PayPal's earnings from such transactions quite substantially.

Kind Regards, Kevin

Debbie Levitt said...

To Henrietta and Brews:

ProPay told me something else. I will check with them today because at this point, I don't know what is correct.

If I'm wrong, I completely admit I'm wrong, and publicly apologise to both of you and everybody who read my comment.

I will let you know what ProPay tells me.

Henrietta, I don't "blast" people. I'm always looking for silver linings and places to be positive about things. Sometimes, I'm the only one. :)

tree411 said...

I know one thing and this is it. Bonanzle. A great alternative where I can set up what ever payment I would like. Growing fast at over 5,500 members. Over 200,000.00 items listed. Shortly out of BETA. I call it a breathe of fresh air. Come see what buyers and sellers are so excited about.

Debbie Levitt said...

I'm back, and we're both right. :)

ProPay told me that they will lock in rates for 12 months. So if you enter as a Gold PS and drop (and never go back up), they will look at changing your rates at the end of your 12-month period.

If you raise in the PS ranks, you can ask them to review your account for lower rates. But they are not going to constantly change rates each month as PS levels may change for a seller.

Hope that clears it up, and I apologise for anything I said earlier that was false.

Brandon said...

I am glad you were able to come to the correct conclusion about how we deal with a change in PowerSeller ratings. In case everyone wanted a final word, thebrewsnews and Debbie Levitt's last post had it right; PowerSeller ratings are constant for a year and are reset to the appropriate PowerSeller rate at account renewal each year.

Brandon Crotts