Logged into my Paypal account to pay my affiliates earlier today and checked out the latest Policy Updates and found this one that indicates a new Refund Fee for sellers that comes into effect August 10, 2010:
- Amendment to the PayPal User Agreement
Section 8.5 (Additional Fees) is amended to add a new refund fee. If you refund a Purchase Payment, we will retain the Fixed Fee portion of the Purchase Payment Fee. The buyer’s Account will be credited with the full Purchase Payment amount and the Fixed Fee portion of the Purchase Payment Fee will be deducted from your Account in addition to the amount of the refunded payment. The Fixed Fee will depend on the currency of the Purchase Payment and is listed in 8.4(c).
Can’t say I am totally shocked, though I would have preferred to have seen accounts that experience an exceptionally high rate of refunds penalized rather than all of us
We’ve worked hard to keep our refund rates extremely low over the last few years, even as sales have gone up by a factor of 10X – measures such as…
1. Gone to higher priced infoproducts where the refund rates are actually quite allot lower
2. Moved to recurring revenue (membership, coaching program and paid X of the month) programs where there is little or no refunds, cancellations may occur for future payments, but requests for refunds are pretty much non-existant
3. Sell physical infoproducts – as long as the quality is good, refund requests are exceptionally low
4. Over-deliver – I like to add surprise bonuses post sale so the customer rarely requests a refund
5. Spread delivery of the product out over 30-90 days where they get the main product right away, an additional bonus after 30-days, a coaching call 45-days later, etc… this both deters fraudsters because they are looking for everything for nothing right away and don’t like these periodically delivered programs AND keeps legitimate customers plugged in
6. Finally – if there is an error or a problem with delivery or some aspect of your product (occurs from time to time) – then I make it right by offering additional products, free access to a membership site, etc… quickly – it was our mistake, so we own up and give them more value to make up for the fact which means they likely will not request a refund.Â
More fees are never good, but it may be more positive for your business if you think a little about how to lower your refund rate – if you lower your rate by just 1%, then the .30 (depending on currency) fee will be nothing…
