Swappa requires all sellers to use PayPal. This enables sellers to receive fast, secure payments, and also to have confidence in knowing they are protected in the transaction. The overwhelming majority of Swappa sales are successful, but there may be a time when a seller needs to issue a refund. If a refund is needed, the seller may wonder if they will be charged a fee.
What fees are involved in a PayPal transaction?
Before we discuss the refund side, let’s first outline the fees. When a seller views the PayPal transaction details for a payment they received from a Swappa sale they will see two fees; the standard PayPal fee and the Partner Fee.
- PayPal fee: This is a standard fee that PayPal charges all sellers for receiving a payment, which is currently 3.49% + $0.49.
- Partner Fee: This is included as a part of a PayPal for Marketplaces transaction, which is how payments are processed on Swappa. The Partner Fee is a combination of the seller fee (3%), buyer fee (3%) and sales tax (based on state requirements and where required). The seller pays the seller fee, and the buyer pays the buyer fee and sales tax.
Does PayPal charge the seller for a refund?
The simple answer is no, however, while PayPal doesn’t charge a fee, they also do not refund the original PayPal fee. According to the PayPal User Agreement:
“If you refund a transaction to a buyer or a donation to a donor, there are no fees to make the refund, but the fees you originally paid as the seller are not returned.”
So far, this covers the standard PayPal fee. However, the Partner Fee is also included in the transaction details for a refund, and this is where there may be some confusion. Unfortunately, PayPal doesn’t always make it clear as to who pays/covers the Partner Fee on a refund.
How to issue a refund on PayPal
As a whole, it is fairly simple for a seller to issue a refund, and the quickest way is for the seller to log in to their PayPal account from a computer. Once logged in to your PayPal account:
- Click the Activity tab
- Click All Transactions
- Select the payment you need to refund
- Click Issue a refund
At this point, you need to consider whether you are issuing a partial refund or a full refund.
- For a full refund, the refund amount should not be edited. Entering a specific dollar amount based on what you received after fees will result in a partial refund being issued, and the Partner Fee will not be properly refunded/reversed.
- For a partial refund, you can enter the amount you need to refund, which would have been agreed upon with your buyer.
PayPal refund FAQ
The refund process is pretty straightforward using the steps outlined above, but there are times when questions arise. Two questions we get from sellers are about adding PayPal asking them to add funds, and about how PayPal is incorrectly reporting that Swappa is refunding $0. Fortunately, these two concerns can be quickly resolved.
- If PayPal reports that a seller has to add funds to their account in order to process a refund, this is related to PayPal’s policy that charges sellers the PayPal fee when refunds are issued. In order to issue a refund properly, the seller will have to add this additional amount to their PayPal account to cover PayPal’s seller fee.
- If PayPal is incorrectly reporting that $0 will be refunded by Swappa when issuing a refund, please note that this is a technical issue with PayPal, and the Partner Fee (seller fee, buyer fee, and sales tax) will be reversed (taken back from Swappa) when the refund is issued.
If you are issuing a refund through PayPal, and have any questions regarding the process, or any questions about how PayPal is reporting the refund details, we encourage you to reach out to PayPal support for clarification. PayPal has several options available for support including text, email, and phone.
