Upcoming Fee Change - Paypal Payment Processing Fee

Advance notice of Seller Fee changes

Paypal Payment Processing Fee

Currently a 35p fee is deducted from Seller payments for orders paid-for by the customer using Paypal, which is intended to cover the cost of Paypal's own fees for processing the customer's payment. Unfortunately this fixed 35p fee now never covers the actual cost incurred by Magazine Exchange and consequently for some time Magazine Exchange has been making a loss on every one of these orders.

This graph illustrates the current position very clearly: (Click image for larger view)

As can be seen the 35p fixed fee (represented by the red line) did originally cover the actual Paypal fees in some cases (although only on the lowest-value orders), but since then Paypal's charges have increased and now it always costs Magazine Exchange substantially more to process the payments than is ever passed-on to the Sellers involved.

May 2020 payment processing fee changes

Magazine Exchange will be instigating a new charging structure for these fees for orders placed after 1st May 2020 as follows:

Orders where the customer paid by Paypal

Order value £5.00 and below - 45p fee
Order value £5.01 - £10.00 - 60p fee
Order value £10.01 - £15.00 - 75p fee
Order value £15.01 - £20.00 - 90p fee

For order values of £20.01 and above Magazine Exchange will manually check the actual fee charged by Paypal for that payment and pass that exact fee onto the Seller

Orders where the customer paid by card

These will retain the existing flat 15p fee for now, although it is likely that a sliding-scale fee structure will be introduced for these too at some point

Payment processing fees on refunds

Another change now instigated by Paypal is that they no longer refund their fee if the payment itself is refunded. Consequently Magazine Exchange Sellers will now still be charged the full payment processing fee even if the Seller cancels the order or only partially despatches it. (Another good reason for regularly stock-checking the items you have listed for sale!)

What these changes mean for Sellers

Firstly it's worth keeping in mind that most orders placed on the website are for a single magazine only and typically less than £5 in value, meaning that the effect of these changes will be very modest indeed in the majority of cases - just a 10p increase.

Sellers should also remember though that the payment processing fee is paid on the total order value - ie. including the shipping charge - so it's worth considering a 'worst case scenario' of, for example, a customer paying by Paypal for a heavy but low value magazine to be sent by Airmail overseas - which could quite easily result in an order value of £10+ and thus a 75p fee resulting from the sale of a single magazine. Sellers therefore need to consider whether they may wish to adjust the selling prices of their items

Questions and Answers

To pre-empt a couple of likely questions from Sellers:

"Can't you charge the customer a fee for paying by Paypal?"
Unfortunately no. In fact we did used to do exactly this but it's now prevented by the same the law that prevents debit / credit card surcharges.

"Couldn't you just stop accepting Paypal altogether?"
This is tempting but just not viable. Customers expect retailers to accept Paypal, and such orders represent a significant proportion of total sales.