PayPal reinstates controversial policy of pocketing fees from refunds

Illustration by Alex Castro / The Verge

PayPal is reinstating a controversial policy around its handling of fees in the event of a refund. Starting next month, PayPal will begin pocketing the initial 2.9 percent commission fee sellers forfeit during a transaction even when the seller is refunding a customer in full.

The company initially rolled out this policy back in April, but seller backlash over PayPal claiming the commission fee led it to reverse course. Now, PayPal says it’s updating its policy for good, citing its “cost structure” and claiming the approach to refunds is in line with industry practice. Sellers are again up in arms over the change, with some claiming that it is not in fact the case that the online payment processing industry handles refunds like this.

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