Layman’s Version of New Visa Mastercard Requirements For PayPal Merchants

Posted on July 19, 2010. Filed under: eBay, Paypal, Tips & Hints - Website Sales, Tips - for the eBay Seller | Tags: , , , , , , , |

All ecommerce sellers who accept PayPal will need to accept the new Commercial Entity Agreement by October 1, 2010 in order to continue receiving Visa and Mastercard funded payments.  

Accepting this new Commercial Entity Agreement actually means that you are agreeing to accept each of the different commercial agreements for several banks.

  • Commercial Entity Agreement with JP Morgan Chase
  • Commercial Entity Agreement with HSBC
  • Commercial Entity Agreement with Wells Fargo
  • Commercial Entity Agreement with Wells Fargo – Pro
  • Commercial Entity Agreement with National Westminster Bank
  • Most of the Commercial Entity Agreements are very similiar but there are some differences.  While the agreements are obviously very complex, I have tried to boil them down into a short list of 5 Do’s and Don’ts that encompasses the highlights of various agreements. 

    1. WHO can and should give and get information?

    Ecommerce merchants must clearly identify themselves to buyers so that buyers know from whom they are purchasing.  This includes the requirement that sellers provide the address of their permanent establishment on their website if they are accepting PayPal payments on their website.

    Sellers cannot ask buyers for their Visa/Mastercard information (card number, expiration date, CVV2 number) and if for some reason the seller gains access to this information, either by design or by default, then the seller agrees to notify PayPal and the buyer promptly.  This is a major requirement because all sellers who accept PayPal must be compliant with the Payment Card Industry Data Security Standards.

     2. WHAT must sellers do in the event things do not go as expected?

    If sellers plan on limiting the return of their item, they must clearly indicate that to the buyer BEFORE the purchase (thus explains eBay’s requirement that all listings have a return policy stated).  If the seller does not want to offer a refund for the return of an item, they need to state something like “NO REFUND, EXCHANGE ONLY”.  Of course, the seller must always provide the item as described.  For example, if a seller offers a blue shirt but delivers a red shirt then Visa / Mastercard would expect them to give a full refund.  But if the seller delivered a blue shirt but the buyer decided that they didn’t want the shirt because it didn’t look good on them then the seller has a right to offer to exchange the item rather than refund the purchase price.

    In the event of a chargeback, sellers must work through PayPal to resolve complaints.  This is often a source of seller frustration because PayPal decides which chargebacks they will fight.  

    3. WHEN can an ecommerce merchant accept PayPal?

     Sellers can only use PayPal to accept payment for goods and services they have provided within a 30-day window (and the days are counted as BUSINESS days).  PayPal cannot be used to collect payment for any previous “debt”.  So, for example, if you are a service provider who offers payment terms (ie customers normally pay their invoices by check within 30 days)  and your customer doesn’t pay your invoice then you cannot agree to accept PayPal for the service you provided 6 months ago but never got paid for with a check. 

    PayPal also cannot be used to accept payments for any good or service that would be considered illegal.  

    Partial shipments can be billed separately so that means one shipment tracking number must be provided for each and every PayPal payment.  If  an eBay buyer purchases 3 items and makes 3 separate payments, each with full shipping cost, a seller who combines all 3 items into one package and gives back a partial refund of shipping for each transaction is at risk for 2 out of the 3 transactions since there will only be one tracking / delivery confirmation number available.

    4. WHERE can ecommerce merchants indicate to buyers that they accept Visa / Mastercard?

    Sellers can display the Visa / Mastercard logos on their own websites as long as the logos are not misleading.  Sellers cannot make it appear to potential buyers that they are accepting Visa / Mastercard directly unless they have their own merchant account.  So any ecommerce merchant who accepts Visa / Mastercard only through PayPal must make that clear by using appropriate logos and wording.    And ecommerce merchants cannot display logos in a way that would imply that Visa / Mastercard endorses the product or the website.

    5.  HOW are ecommerce merchants expected to accept PayPal?

    Sellers cannot establish a minimum or maximum transaction amount.  If a buyer wants to use PayPal for a $1  purchase, for example, then an ecommerce merchant must accept payment and must not charge extra (surcharge) to the customer who uses PayPal.  This provision applies to U.S. sellers but some countries do allow merchants to add a surcharge if it is disclosed in advance.  But this is strictly forbidden in the U.S. 

    Additionally, sellers cannot in any way try to discourage buyers from using credit card funded PayPal payments.

    NOTE that I am in no way giving any financial or legal advice, just doing my best to summarize all the lengthy legal agreements of the new Commercial Entity Agreements.

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    The Stage is Set for eBay to Once Again Allow Sellers to Accept Checks and Money Orders

    Posted on July 3, 2010. Filed under: eBay, Paypal | Tags: , , , , , , , , |

    In the eBay Bulk Edit process, sellers are now presented with an option to change their choice of whether or not to accept personal checks and money orders in addition to accepting electronic payment methods and payment upon local pickup.

    It is important to note, however, that while sellers can now choose to change the payment options to accept checks and money orders in their listings that the revised listings do not show to buyers that they have the option of paying with either of these methods.  However, some buyers have reported that their eBay invoice offers them the option to pay via check or money order.

    So this leads to speculation about whether or not eBay is going reverse themselves and once again allow sellers to accept checks and money orders as sellers had previously been allowed to do.  There are rumors that perhaps eBay is going to allow checks and money orders again only for categories such as collectibles. 

    Or perhaps eBay feels that they need to prepare their platform to allow all sellers to accept checks and money orders for all categories given their recent court case loss.  eBay recently lost a  court case by default judgement in a Detroit class action lawsuit which would seem to set the stage for eBay being required to open up sellers’ payment options to include checks and money orders.

    Those of us on eBay who are sellers often see the platform changes in the programming BEFORE policies are formally announced.  Take, for example, my blog post which shows how sellers such as myself saw new changes to acceptable payment methods occurring in our listing processes but eBay failed to acknowledge at that time they were programming in new policy changes but rather claimed what we were seeing was “a glitch”. 

    Whether eBay is going to partially or fully roll back their electronic -payments-only policy is yet to be seen.  However, it appears that the stage has been set to allow for that possibility in the future.

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    PayPal sends $25 Buy.Com Coupon to Top Customers

    Posted on June 9, 2010. Filed under: Other, Paypal | Tags: , |

    PayPal recently sent out an email to their “Top Customers” offering a $25 coupon (off $100 purchase) on .   Information below:

    Terms & Conditions

  • Offer begins on 06/3/2010 and ends on 06/10/2010.
  • Offer limited to one per PayPal account.
  • Discounted amount will be subtracted from your subtotal product purchase at time of checkout. (Excludes tax and shipping costs.)
  • To receive this Offer you must: a) have a U.S. PayPal account in good standing, b) receive an email from PayPal inviting you to participate in the Offer, c) click on the redeem button and the Offer coupon will appear in your shopping basket, and d) complete your purchase using PayPal.
  • This Offer is not valid with any other coupon or promotion.
  • Instant Rebates, Coupons, and eCoupons may not be used together.
  • PayPal and reserve the right to cancel, suspend or modify part or this entire Offer at any time without notice, for any reason in their sole discretion.
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    PayPal’s New Policy Changes March 2010 Will Cause eBay Sellers to Bear the Costs of Another Type of Buyer Fraud

    Posted on February 20, 2010. Filed under: eBay, Paypal, Tips - for the eBay Seller | Tags: , , , , , , , |

    PayPal has announced changes to their user agreement that will take effect on March 10, 2010: (the following has been copied directly from PayPal)


    “Amendment to the PayPal User Agreement, Acceptable Use Policy, and Student Account Agreement Effective Date: Mar 10, 2010

    • Amendment to the PayPal User Agreement

    Section 8 (Fees) of the User Agreement is amended to state that you may not send a Personal Payment to a recipient in India. Any payment sent to India must be for a Purchase Payment and will be charged the Purchase Payment fees.

    • Amendment to the PayPal User Agreement

    The following will be added to section 11.7 (newly numbered 11.5) as an additional example of transactions not eligible for seller protection:

    “Items that are not shipped to the recipient’s shipping address on the Transaction Details Page. If you originally ship the item to the shipping address on the Transaction Details Page but the item is later redirected to a different address, you will not be eligible for seller protection. We therefore recommend not using a shipping service that is controlled by the buyer.”

    • Amendment to Section 13 (Protection for Buyers) of the PayPal User Agreement

    Section 13.3 (Eligibility of Item Purchased on eBay) has been amended. Eligibility for PayPal Buyer Protection is now based on whether the PayPal or eBay buyer protection message is included in the eBay listing. Previously eligibility had been based only on whether a PayPal Buyer Protection message was shown.

    • Amendment to the PayPal Student Account Agreement
    1. The following language is added to section 3.c (Parent Control):x.: “Marketing Promotions. If the Parent Account has opted-in to receiving marketing notifications in its Account Profile, then we may send such notifications to the Child as well.”
    2. The following language is added to section 3.d (Child Control):x.: “Marketing Promotions. The Student may participate in marketing promotions or campaigns offered from time to time.”
    3. The last paragraph of section 4 (Liability) will read:“Any online agreements that are accepted by the Child, including terms and conditions of any promotion the Child participates in, are accepted by the Parent as if the Parent had taken the action. The Parent is responsible for educating the Child on internet safety.”
    • Amendment to the PayPal Acceptable Use Policy

    Beginning March 10, 2010 the PayPal Acceptable Use Policy is being amended under the Activities Requiring Approval section to add airlines and scheduled or non-scheduled charters/jets/air taxi operators as services that require pre-approval.”


    My comments: There is one change above that baffles me.  PayPal states beginning March 10th “If you originally ship the item to the shipping address on the Transaction Details Page but the item is later redirected to a different address, you will not be eligible for seller protection. We therefore recommend not using a shipping service that is controlled by the buyer.” 

    Given that:

    1. The U.S. post office will forward shipments to a different address if the recipient (buyer) submits a change of address form


    2. FedEx will forward shipments to a different address if the recipient (buyer) calls in to FedEx and, to add insult to injury, the shipper gets the privilege of paying for the change


    3. UPS will forward shipments to a different address if the recipient (buyer)  requests a change and pays for the forwarding cost

    what shipping service is PayPal actually recommending that sellers use to ship items in order to receive seller protection?  It’s painfully obvious that there is no reasonable way that most sellers can mitigate this particular risk of fraud.  Therefore, it’s clear that PayPal’s intent is simply to shift the cost of this particular fraudulent activity to sellers.

    Given that PayPal is making this policy change there must be a signficant number of eBay buyers who are perpetrating this type of fraud.  So, as an eBay seller what steps can you take to try and reduce the possibility of becoming a victim after March 10th?

    First, recognize that while you are covered under the PayPal seller protection for shipments to both confirmed and nonconfirmed addresses, you are obviously more at risk for shipments to nonconfirmed addresses.  If you have a “new” eBay user purchase a very expensive item and include an unconfirmed shipping address in their PayPal payment then you have to decide if you are willing to accept the risk that you could lose your item and your money.  The more “red flags” there are, like the user being newly registered on eBay and having an unconfirmed address, the more risk that is involved in the transaction. 

    Some things you can do to lessen your risk is to sell your expensive item on another venue where you have more control over the payment methods you will accept or where the buyers are a less risky group.  Alternatively, if you still want to sell the item on eBay you could always list the item at a slightly inflated price with a Best Offer option.  That way, you could manually decide whether or not to accept someone’s Best Offer based not only on the amount of money they offer you but also on their eBay reputation.  I know I would be willing to take a lesser amount from a long-time eBay user with good feedback because there is less risk of being a victim of fraud.  Slightly less reward but potentially significantly less risk.

    Shipping through the post office is less risky than shipping by FedEx or UPS.  A recipient could put in a change of address and have packages forwarded with the intent to defraud the seller but it is not as likely for postal shipments for several reasons.  First, a postal mail fraud crime carries much more severe penalties and most, but certainly not all, items shipped through the post office are smaller packages that are usually less valuable than packages shipped through Fedex or UPS.  Therefore, most buyers would not go to such trouble of commiting fraud by forwarding the package through the post office when the items sent through the post office are not very valuable.

    For heavier and more valuable packages, sellers most often use UPS or FedEx so there is more risk using these carriers.  So the question is which carrier is now the less risky carrier for shipping items purchased on eBay using PayPal.  UPS will reroute packages to a different address if the buyer requests it and pays for the address change but UPS will only do so after they have first attempted delivery to the original location.  On the other hand, FedEx Ground (and Home Delivery) services will change the address as requested by the buyer even while the package is still enroute and no delivery attempt has been paid.  Therefore, FedEx shipments are very risky to eBay sellers.  However, there is one exception.  If a seller wants to prevent FedEx from rerouting the package then the seller needs to choose and pay for “Adult Signature Required“.  When this particular signature option is chosen, no address change will be honored.  Not even the shipper can request an address change once a package  has been shipped via FedEx Ground (or FedEx Home Delivery) with “Adult Signature Required.”

    Being an ecommerce seller involves managing all sorts of risks.  And the rewards of being an entrepreneur can be great.  However, it seems to me that the financial rewards of being an eBay seller keep decreasing while the risks just keep on increasing.

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    Saturday Snippets for eCommerce Buyers & Sellers

    Posted on November 21, 2009. Filed under: Amazon, eBay, Paypal | Tags: , , , |

    Today, I am following up on some previous ecommerce news and adding some updated information to each of the news stories.

    eBay’s Cross-Merchandising Promotion

    On November 16, 2009 eBay announced that they would begin a new cross merchandising promotion the following day whereby other sellers’ items would appear on current listings.  The following day I tested what eBay was doing with this new promotion and in my blog post titled “eBay’s New Approach to Marketing: Throw the Kitchen Sink at Buyers” I reported on what I found (that buyers were shown related items that were in fact NOT related to what they had originally searched for) and stated my opinion about why I was going to opt out.

    On November 19th, eBay Seller Advocate Griff stated my article was “misleading” on the “Ask Griff & Lee Show #168 Nov 19th, 2009” Discussion Board (note that you have to be a member of the Group to access the eBay Radio Discussion board).  Specifically, Griff’s comment about my blog post is post #34 of 186.  Also, on that date, Griff spent the first part of the Radio Show defending eBay’s decision to implement the new cross merchandising promotion and stated that anyone who opted out was making a bad business decision.  Griff said that he would opt into the promotion because he offers good merchandise at competitive prices with excellent pictures and descriptions and his eBay reputation (feedback) was good.  As such, Griff felt that he would gain more than he would lose by remaining opted into the program.

    On November 20th, Ina Steiner of AuctionBytes posted an  interview  with an eBay representative where she asked some really tough questions and even asked eBay to comment about what I had written.  Sadly, eBay didn’t take advantage of the opportunity and pretty much blew the interview by providing answers that were, at times, not even relevant to the question being asked. 

    So, today, I thought I would follow up to the week’s events by looking at the Top 5 eBay seller accounts based on the number of feedback received and see what each of these sellers had decided regarding the new promotion offered by eBay.  If, as Griff had stated, remaining opted into the new cross merchandising promotion was a good business decision for sellers who have an excellent track record on eBay and who are offering merchandise priced competitively, then I would expect many of the top sellers to be participating in this new promotion.

    According to, the top 5 eBay sellers (based on feedback) are Accstation, Eforcity, EveryDaySource, ITrimming, and Buy

    * All Top 5 eBay sellers are also Top Rated Sellers 

    * All Top 5 eBay sellers have received more than 1 million feedback ratings on eBay
    (note that because of some buyers leaving multiple feedback, Buy’s actual feedback score is just under a million)

    I reviewed the listings of all 5 of the Top eBay sellers and NOT ONE of these sellers remained opted into the promotion.  This begs the question: If my assessment of the new cross merchandising program is so misleading and if it is a bad business decision to opt out of the promotion then why did all 5 of the largest eBay sellers opt out?  I guess eBay’s weak arguments “for” remaining opted in did not convince these Top 5 eBay sellers.

    PayPal Mastercard News

    On October 31, 2009 I wrote about A Glitch With PayPal Upgrade on October 14th Caused Some Problems for Some PayPal Mastercard Members.  Following that post, the person who supplied with the information (a close family relative) called into PayPal and received completely different information.  My source was told that it was originally an error for users to be allowed to charge their PayPal shipping to their PayPal Mastercard and that the upgrade remedied that “error”.  She was also told that they would try to fix the error which was not allowing her to use her Discover card to pay for postage (currently she could only pay for her shipping labels by using her PayPal balance or her checking account). 

    When the PayPal representative was asked why she could use her PayPal Mastercard to pay for postage on the USPS website, the representative did not address that question but instead told my source that using USPS for shipping instead of PayPal would void any seller protections (which we all know is erroneous information).

    Last week, my relative was printing a label on PayPal and was surprised to see that not only could she choose to fund the postage purchase with her Discover on file but could also use her PayPal Mastercard to fund the postage purchase.  Interesting.

    It’s Not Just eBay Kicking the “Small Seller” to the Curb

    On November 12th I wrote that I had received my email notification from Amazon letting me know that I had qualified to sell Toys on Amazon during the 2009 holiday season.  Amazon has strict requirements every year but one thing that was different about this year’s requirement was the tougher “sales volume” requirement:

    Merchant must have processed and shipped at least 25 orders (do not need to be Toy-specific) during the 60 consecutive days preceding 11/1/2009

    The 2009 sales volume criteria required at least 25 orders to qualify, as in the previous year, but the time period for those sales was decreased significantly.  Instead of needing only 25 sales for the year, as was required in 2008, Amazon sellers in 2009 were required to have 25 sales in the preceding two months.  This more stringent sales volume requirement has caused a great many “hobby” or “part-time” sellers, many of  whom are actually long-time Amazon sellers, to be left without selling privileges for the 2009 holiday season.  Most of these toy sellers I spoke to say they have no choice now but to list their items on eBay this year.

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    eBay System Sends Out Invoices That Buyers Are Unable to Pay

    Posted on November 19, 2009. Filed under: eBay, Paypal | Tags: , , |

    When an online shopper wants to buy something on eBay, it is at least a 2-step process whereby they “purchase” the item(s) and then “pay for” the item(s).  Many first time buyers experience trouble getting Paypal to work at all.  And inexperienced eBay shoppers often try to circumvent the PayPal system because it is too difficult to understand or too time-consuming to learn how to use it properly.

    Despite making it very clear in our listings that we only send packages to the SHIP TO section of the PayPal payment (for the protection of the buyer as well as our own protection), we often receive PayPal payments from eBay buyers who then send us a follow-up email asking us to ship to an alternate address.  No matter the value of the transaction, we always decline to ship to an alternate address sent by separate email.

    1. It is very difficult later to provide details about a shipment when a buyer uses a business ID and business PayPal account to purchase an item but then asks us in an email to send to their personal name and personal address.  When the buyer later inquires weeks or months later about the status of the package, we initially don’t know that the package was not shipped to the address in PayPal so it takes us quite awhile to research.

    2. We have found that buyers sometimes purchase small items and request shipment to an alternate address and if we accommodate their request they return and purchase hundreds of dollars of items and make the same request.  It is difficult to explain why we did so the first time for a $10 transaction but will not do so for a $300 transaction. 

    3. By shipping to an alternate address we have given up all PayPal Seller Protection that would have been provided to us if we had shipped to the address provided.  Selling on eBay is already risky enough and we are simply not willing to incur any unnecessary risk.  PayPal requires us to ship only to the address provided and we follow their recommendation.

    Recently, PayPal has removed the ability for an eBay seller to send an invoice directly for eBay purchases.  So that means an invoice for an eBay purchase MUST be sent directly from the eBay system.  The problem with that, however, is that sometimes eBay makes it difficult or impossible to send invoices.  Take, for example, a case where a seller lists an item with Immediate Payment Required to avoid the issue of nonpayment.  Whenever a buyer makes a purchase of an Immediate Payment Required item, there is no room for error since a buyer has only one shot to get things right.  Afterward, if the buyer emails and tells you that they realized they put in the wrong address or used the wrong payment method and wants to make a change then they are simply out of luck.  The only option is to refund and cancel the order and start over (and, of course, cancelling the transaction opens the seller up to receiving negative feedback for the poor experience the buyer had with the eBay and PayPal system).

    With Immediate Payment Required purchases, eBay removed the possibility of sending a new invoice after the original payment was refunded.  But now, we have experienced problems with purchases that are not Immediate Payment Required.  While a new invoice can be sent through the eBay system, the invoice is odd and the buyer says that they are unable to pay because they keep receiving an error message telling them that they have already paid.

    For example, I recently had an eBay buyer win an auction that, with shipping, totalled $9.49 .  The buyer paid but sent a separate email requesting delivery to an alternate address.  We responded that we couldn’t send to an alternate address (as we state in our auctions) since that would violate PayPal policies.  We informed the buyer that we would refund their payment and reinvoice them unless we heard from them.  That would allow the buyer to add the new address on their PayPal account and resubmit payment. 

    When we refunded the original PayPal payment and then sent a new invoice, the eBay invoice looked like this:

    So, when the buyer attempts to pay the “new” invoice they receive an error message and they are unable to pay the eBay invoice through the eBay system.  The eBay “purchasing system” is so difficult for the buyer, eBay does not provide any type of buyer education, and when a buyer makes an error (no big surprise) eBay makes it impossible for the seller to work with the buyer to correct the buyer’s mistake.  What is ironic is that as we continue to sell less and less on eBay we experience even more problems.  I can’t even imagine the headaches we would have if we were selling at pre-2009 volumes.  We’ve kept a token “foot in the door” on eBay so that we would not have to start from scratch if/when eBay finally got things turned around.  But I am becoming less convinced every day that eBay even has a shot at turning things around.


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