PayPal Announces New Fee Structure Reiterating Why Cryptocurrencies Are Important Alternatives
PayPal, the fintech giant, has announced a new fee scheme that has raised concerns among the crypto community. The firm informed that it will be keeping seller’s fees when processing a refund going forward. This could have a small impact in the crypto community since merchants could move to Bitcoin (BTC) and other digital assets.
PayPal Announces New Fee Structure
PayPal has not only announced that it will adjust seller’s fees, but it also mentioned that it will be altering international payments. Until now, transferring funds from one country to another had a flat fee, but this time, it will start to be a percentage of the total amount transferred.
Cryptocurrencies will play an important role in this situation. Users that want to perform an international transaction can do so in just a few minutes and paying a smaller fee. According to a recent report released by TechSpot, PayPal will be taking a set fee of 30c from sellers in each retail transaction. At the same time, they will also take a 2.9 percent of the value of the goods or services sold.
With the new old scheme, if there is a refund requested by the user, PayPal will give back the percentage to the seller, but it will not return the set fee. As of May 7, 2019, PayPal will also keep the percentage of the transaction when a refund is requested. That means that the seller will be responsible for the customer changing his mind about a purchase.
That means that every $1,000 requested back, the seller will have to pay $29. This could be a great opportunity for sellers to move to Bitcoin and other digital assets. Bitcoin does not depend on a centralized authority that determines the fee structure of the network.
The new international fee for transfers will be a percentage of the whole transaction. The fee will never be more than $4.99 and no less than 99c. Nonetheless, every single time an international transaction is processed, to extract the funds in the local currency, the exchange rate is usually between 5% and 10% less. Which is also very negative for the seller.
In this case, Bitcoin, Ether (ETH) or Litecoin (LTC) work in a much better way than PayPal, without having to increase their fees unexpectedly.