Don't be blindsided when PayPal ups its fees

Earlier this week PC World blogger Jared Newman opened a can of worms by calling out PayPal for quietly adding a fee for transactions labeled as "Goods" or "Services."

What happened was; Jared got his blogging paychecks via PayPal and noticed that the company had deducted 2.9% plus a 30 cent fee for each of the payments. Not understanding why this happened, he did what anyone should do when they are charged an unexpected fee, even for a small amount. He asked PayPal what it was all about.

Surprisingly, their response was very candid, even humorously so, if it wasn't going to net PayPal an extra million bucks this year. Charlotte Hill, PayPal's PR manager told Jared,
"We didn't want to make a huge formal communication out of this pricing change, because we weren't really adding any fees, and we were hoping it would be a more useful experience for people."
Hill further points out to Jared that PayPal did announce the change in a blog post and in various news outlets. However, the blog post does not mention that a fee increase has been enacted and up until recently, there weren't news stories addressing the fee change.

Interestingly enough, Consumerist points out that you can avoid the fee by marking your PayPal payments as an "eBay purchase" or using the "personal tab".

Now that you know how to get around this fee, take a look at how you could have found out about it and how to stay in the know about future fee increases.

One way to discover this change back in June is to have logged into your PayPal account and for no real reason clicked on the "Policy Updates" link on the right side of your PayPal homescreen.

Now that this fee is out there in the open it's safe to say that you know about it but how can you make sure that you regularly read the PayPal Policy Updates page or you are signed up to receive, "ALL Policy Change Notices" in your e-mail preferences?

To make sure that you are e-mailed about any future PayPal rate changes follow these simple steps.
  1. Log into PayPal.
  2. Click on Profile.
  3. Click on Notifications.
  4. Check the ALL Policy Change Notices box and save the page.
The notifications menu looks like this.

Now we all understand that rates go up, rates go down. Times change and businesses adapt to make money and stay afloat, it's how things work. If you don't like a rate change it's your responsibility to take your business elsewhere, even if there are few viable market alternatives. What makes these actions by PayPal different than most of the rate or fee changes that we encounter is that PayPal doesn't have to notify you of the change.

If your credit card APR goes up, you get a letter, if your online bank's interest rate drops (again!) you get an e-mail. If your chiropractor has to start charging an extra $5 per visit he puts a sign up a month in advance. Whether they are required by law, banks and credit cards, or just want to treat you like a person instead of a number; they tell you in advance.

The fact that PayPal decided to slide the fee increase in without at least notifying users who commonly make these goods and services transactions ahead of time tells consumers a lot about the company's attitude toward their business.

If PayPal wants to make sure that users don't feel slighted in the future they should substitute one of the PayPal debit card ads that users see every time they login with a notice about rate changes.

Perhaps it would have been a good thing if the Fed had decided that PayPal was a bank in 2002.
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