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Quoted from Barakawins1:Honestly if you refund payment immediately for whatever reason, especially immediately, there should be zero fees taken out from the seller or buyer. The transaction never took place.
Why? Did the work PayPal do to process the original transaction get undone? Now they are doing an extra transaction to process a refund.
Should they do that for free?
Quoted from Barakawins1:Yes. They should do that for free. I'll give you an example as to why and how. A buyer sends you payment for $5000. It should only be $500. An honest seller
refunds this payment immediately. However, the way paypal works is they nail the seller for the buyer's mistake and in this case charge the seller 2.9% and .30
or $145.30 immediately because of the seller's mistake. They are basing their fee on a fictitious sale amount. So, because the buyer makes the mistake and
the seller makes the refund in a second, the seller loses $145.30 in a second. This is wrong at all levels. There should be a standard transaction fee which is not
based on the amount of a sale. Next, paypal should not be allowed to remove $5000 from your bank account and place it into your paypal balance, less the fees
they deducted. They should only be able to deduct a processing fee. This is why no one should link their bank account.
I think it's worth discussing the separation of payment processor from merchant. You as a merchant have hired PayPal to be your payment processor. There are other payment processors out there, but you've chosen PayPal because they have an enormous reach and make the process of accepting money really easy for you. As someone else put it, a necessary evil. I encourage you to shop around routinely for payment processors, there are lots and they all have different pros and cons.
In the situation you outlined, I imagine it would be up to you to contact your customer and explain that you think they should reimburse you the fee because it was their mistake. If I was a customer who did that, I would expect to pay for my mistake.
Nowhere in those transactions did PayPal make a mistake. Their system worked exactly as they advertise and provided you a secure way to accept money.
I don't mean to seem like I'm a super fan of PayPal, because they certainly have flaws like any payment processor does. But you make it seem like they are doing you a disservice for implementing what is standard procedure with most payment processors. I don't see how a mistake made between you and your customer is PayPal's fault.
PayPal also has an invoice system you can utilize to make sure people are paying the proper amounts.
I encourage you to google "interchange fees" to understand more about why these transactions, including refunds, have to cost money.
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