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HalfofThe > Blog > Technology > PayPal Merchant Fees Increased: How Merchants and Consumers Will Be Affected
Technology

PayPal Merchant Fees Increased: How Merchants and Consumers Will Be Affected

HalfofThe
Last updated: 2021/08/17 at 10:07 AM
By HalfofThe Published June 20, 2021
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PayPal Merchant Fees Increased: How Merchants and Consumers Will Be Affected HalfofThe
PayPal Merchant Fees Increased: How Merchants and Consumers Will Be Affected HalfofThe

If you have not heard by now, PayPal has made a new announcement that will affect both merchants and consumers. Starting on August 2nd. This means that any business that is using PayPal for payment processing will be paying more money to do so. There has been a lot of speculation about why this increase was necessary, but the most common answer seems to be due to an increase in competition within the e-commerce industry. As always, there are winners and losers when it comes to these changes – we’ll take a look at which groups may benefit or suffer from this change in merchant fees.

How will PayPal Merchant fees increase impact your business?

Well, if your business is online based and depends on online transactions, the new rates will be 3.49% plus $0.49 transaction fees. But, if you are using PayPal in an in person payment or Venmo transaction, the rates drop to 1.9% and $0.10 per transaction above $10. For online credit and debit card transactions, you will end up paying 2.59% plus $0.49.

PayPal has been a popular way for merchants to collect payments online. With this increase in fees, it seems like there is less incentive for business owners to continue using the service. PayPal offers two forms of payment processing – one being Pay flow Pro and the other being Instant Payment Notification (IPN). The IPN option used by many small businesses is now going up because they are switching their pricing structure from flat-rate monthly charges with an additional charge per sale made on sites that use them. So you’ll be paying more if your site makes more sales than others, who don’t have such a high volume amounts of traffic or transactions each month.

How this PayPal Merchant fees increase affect consumers and merchants?

Ultimately, PayPal’s decision to increase its fees will be a detriment for all parties involved. The company could have implemented these changes in a better way that would not hinder the growth and success of either merchants or consumers, but instead, they are choosing to make it more difficult by making incremental increases with little feedback.

We can only hope that someday soon this cycle may come to an end – though I’m not holding my breath. What if you don’t want to pay higher transaction costs? You’re stuck using Payflow Pro which has monthly charges as opposed to just per-transaction charges; IPN is cheaper at $0.25 per transaction, so there’s really no point switching over now even though it was originally advertised as being “free.”

With the vast majority of users using the PayPal service, merchants have no other option than to stick to the PayPal fee increase until there is proper competition in this market. Soon after this announcement, there is a significant growth in PayPal stocks.

What you can do if you still want to use PayPal despite the fee increase?

  • Switch to IPN, which is cheaper than Pay flow Pro
  • Raise your prices accordingly that customers won’t notice the fee increase.
  • Use an alternative service like Stripe or Square, but be aware that these services may not work with all of your customers, and you’ll have to start over from scratch.

There are not many options available because of the trust that PayPal has gained all these years from consumers, but small businesses should adapt to these price hikes and move ahead.

Also Read: Oxygen OS: The Rise and Fall

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HalfofThe is an interactive media endeavour found in 2021 to put forward the latest technological advances in the industry and explain its impact on people. While we primarily cater to tech updates, we also get you all the recent updates from entertainment to sports. All our articles are curated after intense research through verified sources.
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