The eBay PayPal 10% Hold Solution
25 June 2009
EventHorizon1984
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The eBay/PayPal legal/financial team was busy at work implementing the new and improved 10% hold policy. Where PayPal holds 10% of PayPal payments made to sellers.
The dunning template (we edited in the Fill In The Category) letter sent out on June 23rd reads:
Your business is important to us, and we are
working hard to provide an easy, fast and secure payment service to you
and your customers while keeping our prices competitive. We're also
committed to clearly communicating changes to our policies and
procedures. To that end, we are writing to inform you of a change to
your PayPal account, which will take effect 30 days from the date of
this email.
Beginning 07/23/2009, a small percentage of the
total payments you receive will be held temporarily as a reserve in
your account. This small reserve amount helps to ensure that funds are
available to cover payment reversals or buyer chargebacks, if you do
not have a sufficient PayPal account balance and do not provide the
funds to do so.
A reserve is like a security deposit for
your PayPal account and is standard practice in the payments industry,
especially for retail segments like Fill In The Category where there is a
higher-than-average risk of reversals or chargebacks. This does not
mean that you have done anything wrong. We are requiring a small
reserve in your account because you sell in a category that has a
higher risk of reversals and chargebacks and because you are relatively
new to PayPal as a seller.
Your reserve amount will be 10%
of the total payments you receive, which will be held on a rolling
60-day schedule. That means 10% of the money you take in each day will
be held in your account, and then made available for withdrawal 60 days
later.
For example, if you receive $2,000 every 60 days
into your PayPal account, then a reserve amount of about $400 would be
required on a rolling 60-day period. In other words, about $6.67 would
be held in reserve each day, then released 60 days later.
If you are a PayPal Money Market Fund customer, you will still earn
interest on your total balance while your money is in reserve. Click
here for more information or to enroll in the PayPal Money Market Fund.
We recognize this is a change in the way we do business with
you. By requiring some merchants to reserve money in their accounts,
we're able to lower our own costs. Keeping our costs low helps us to
continue providing competitive pricing for all sellers who use PayPal.
If you have any questions about this change, please call us at
1-877-729-7252. We appreciate your business and look forward to a
continued partnership.
Sincerely,
PayPal
According to orange_cape_hides_me the Fill In The Category covers:
- "purses, clothing & fashion accessories
- books
- industrial
- motor parts
- games, toys (aver. price $25.00 or less)
- stamps
- fabric
- pool supplies
- and pet supplies"
According to PayPal:
The end of second quarter (June 30) looming for eBay and PayPal, explains the timing of the 10% hold policy. Essentially new financial quarter, new revenue. The why hold at all can be found in knowing what the "1%" represents.
Using numbers from eBay's SEC (U.S. Securities and Exchange Commission) filing, 23 October 2008 10-Q Quarterly Report Form 10-Q, the following is the worse case (for sellers or best case for eBay/PayPay) calculation of "1%" per quarter.
- Active eBay users affected: 830,000
- Active registered PayPal accounts affected: 548,000
- Net total payment volume, HELD: $115,690,000
PayPal's revenue in this case would be the interest on the $115 million per quarter, or $450 million per year. Plus incidental fees.
As we've noted on previous occasions, this is what eBay/PayPal considers to be "small."
"Keep On With The Force Don't Stop
Don't Stop 'Til You Get Enough"
Released 1979, Michael Jackson (1958-2009)
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"Come to think of it", eBay Lifted the Heineken Advertising Slogan
2 November 2009
EventHorizon1984
It's been a long time since we've heard the phrase "Come to think of it". Not the "new" eBay ads flooding the market with "Come to think of it, eBay." But the Heineken slogan noted by Lucious Van Der Kreig on Auctionbytes."
"Come to think of it,
I'll have a Heineken."
Founded in 1864 by Gerard Adriaan Heineken, Heineken is "Europe's largest brewery."
Perhaps ironically you can find this 1986 color advertisement, "COME TO THINK OF IT ~ I'LL HAVE A HEINEKEN! 1986 AD" for sale by seller Woods_Elf on eBay.
.
"If there is something to steal, I steal it."
Pablo Picasso
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Addendum
4 November 2009
A little extra digging turned up this gem.
The rest of the very very short article states the initial advertising budget was $12 million. Adjusted for inflation that would be about $28 million now.
One wonders how much eBay spent to copy an existing successful advertisement.
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Addendum
6 November 2009
Yes, at this point we're merely having fun. After all eBay and it's compensated representatives are now spinning "Come to think of it" is a common idiom and essentially free for the taking.
Anyone know the name Mal MacDougall?
Here's to you Mr. Mal "Come to think of it, I'll have a Heineken" MacDougall.
.
"I'm never surprised when the gods of advertising remind me once again that there is nothing permanent in the business but change."
Mal MacDougall
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Posted on 02 November 2009 at 12:52 in Business, Commentary, eBay, Legal | Permalink | Comments (0) | TrackBack (0)
Technorati Tags: 1864, AuctionBytes, brewery, Come to think of it, eBay, Gerard Adriaan Heineken, Heineken, Mal MacDougal, The New York Times Philip H. Dougherty, Woods_Elf
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