We are in the process of finding a different payment solution because Paypal is a minefield for sellers exploited by scammers world wide.
While PP does protect the buyer to a certain degree there is zero protection for the seller (in spite of claims to the opposite) – Paypal simply lies in that regard.
We had cases where a fraudulent “customer” from Singapore ordered an expensive item paying with his CC, and after receiving the goods claimed to not have ordered them, asking for a refund through his CC company who in turn requested the money back from PP who in turn deducted it from us. No question asked. Then a while later our goods could be found on ebay. In spite of this obvious fraud PP did nothing to support us, the seller and we had a 100% loss. In another case in Bulgaria the customer did not collect the item from customs who opened our very good packing, then did not close it properly upon returning it to us. The item was subsequently destroyed in transit and another 100% loss had to be booked by us. Again Paypal refunded the customer “because he did not receive the goods”. Yeah, due to his own neglect but that was immaterial to PP.
In addition to all of this if a customer changes his mind and cancels an order before it even gets shipped Paypal will keep the 4.3% processing fee plus the 2% currency conversion fee and refund the customer 100% letting us sit on the 6.3% loss.
Being in India also complicates the situation. India is a 3rd world country and its currency is basically worthless outside of it. To “protect” their monetary system they have a few “special” laws that make is easy to get hard currency into the country but very hard to get it out again. In case of Paypal they are required to immediately transfer funds received from outside into an Indian Rupees account making it practically impossible to refund a cancelled order unless the cancellation is received within minutes of the order. But even then it is impossible to refund throught the normal Paypal channel because PP now keeps their “processing fee” even in cases of immediate refund – so there will never be enough money in the PP account for a refund because previous amounts received will have been shifted to Rupees already and the current amount is not the full refund because of the fee held back by PP.
So refunds for ANY reson have become a major and potentially expensive headache for the seller.
And then there is the worst case which is the optimal setting for a fraudster and in turn the most expensive for a seller. If we choose to refund a customer who changed his mind and cancels an order thru other channels than our business PP account (because of the factors explained above) – PP will allow that customer to still file a complaint and there is a high liklyhood the fraudster will then receive his money back TWICE at our expense.
Because we deal in motorcycle parts which is a very specific niche and riders in general are very reliable and have high moral standards our losses have been relatively small in numbers but because the items we sell are expensive each one is a hard hit for a small enterprise like ours. Unfortunately fraud seems to be on the rise world wide, possibly connected to the general trend of a downward financial trend. For that reason we are anticipating an increasing number of attempts to exploit the bugs in the system.
In all likelyhood we will be shifting to a payment option where sales are final and refunds will be the exception (limited to cases of warranty claims etc.) which will allow us full control over our own “terms of sales” and not Paypals. We may lose a few customers who do not trust us enough to buy from us under such condition but then again, I would not ever buy from a seller I do not trust, period, regardless of payment options offered.