PayPal Slips In Hidden Fees

Posted: Aug 20 2009, 12:15pm CDT | by , Updated: Aug 11 2010, 3:53pm CDT , in Technology News


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As a general rule, if you've used PayPal you've had problems with PayPal. Despite being the most used service of its kind, PayPal's corporate policies have created more than their fair share of stirs over the last few years. Today, Ars Technica reports on some new PayPal policy changes that could end up costing you where you least expect it.

When they updated their policy in June, PayPal changed the way they handle certain transactions. It used to be that if you were using a personal account, you could make payments or transfers to other people for free. If you needed to send your cousin fifty bucks to help him make rent this month, PayPal wouldn't charge you to the transfer. Things only worked this way for personal accounts, however, and business or premium account holders couldn't make 'personal' transfers to friends and family without paying.

Now that has changed, which is very nice. Premium and business users can send money for personal reasons without paying. Unfortunately, PayPal made another change to their policy that they weren't very transparent about. Now any transfer that has to do with goods or services has to pay the 3 cent+2.9% fee. This includes personal payments, and payments made any time someone sends you a request for money.

So, if your brother calls you on the phone and asks for some cash, you can send it to him free. If he sends you a request for payment, the transaction is charged. You can get around this by claiming the money as a gift, but that doesn't work if there is an invoice or purchase order involved. Most transactions people make on Paypal are in this category, but people have just started to realize it.

Once again, PayPal has managed to provoke a great deal of ire without actually doing anything legally wrong. They altered their terms of use and stuck some small-text warnings in the legal jargon on the login page. That's all they were required to do, but customers usually appreciate getting some large, formal warning from a company before a major shift like this. This won't do anything to help PayPal's image, but who cares about image when you have huge stacks of money?

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