Pay Pal Friends and Family

[jimmy powells]

Just a point re sellers offerring items and perhaps asking or suggesting Friends and Family payment option. I think it is likely that if someone bought an instrument and paid this way to save seller paying Pay pal fees and the deal went wrong, I don't know if Pay pal would definitely step in and give money back as it would appear to be a "family matter".
They would quite probably view it as a deliberate attempt to avoid PAY PAL fees. Pay pal can't do this for nothing so just my thought on it and worth considering. Perhaps sharing fees is a fair option or the buyer paying. I think it is more for the buyer's protection. Any seller could ask for bank transfer or whatever but if BUYER needs to protection and convenience then perhaps the BUYER should pay the fee. Just my view or seller should build it into the cost.

Jimmy
UK

[DougC]

This seems to make sense. There may be a 'suggested' method rather than an official policy from Mandolin Cafe. Sort of like the suggestion to make a donation to the Cafe.

I wonder why people mention the Pay Pal fee anyway? Just how much does it amount to? Say an instrument costs $2000 (U.S. dollars)

Compare this to the fee one would pay from a credit card.

[Folkmusician.com]

Jimmy,

Correct, Pay Pal does not offer buyer protection on friends and family transactions. I can see this coming up here and there with people selling their personal instrument, but any professional seller doing this has questionable ethics.

PayPal Fees are right there with credit card fees for an average merchant account. If you do a high volume of sales, a merchant account usually has a slightly lower rate.

PayPal runs 2.9%, so it can be a rather large chunk, especially for people doing this for profit and not just selling off their personal instrument. Someone that is trying to flip an instrument and make a couple hundred, can see 50% of the profit go to shipping and PayPal.

A $2000 instrument would incur a $58 PayPal fee. And may run over $50 to ship, so there goes over $100 in just those two fees.

[colorado_al]

I leave it up to the buyer. If they wish to buy with PayPal, they can add 3% to the price and pay with a"goods and services" transaction. If they want to avoid the 3% cost, they can pay by "friends and family". I always ship with insurance on the entire price, including shipping cost, so if there is an issue from transit, it should be fully covered. I also offer 48 hour trial period, buyer to pay shipping both ways of they decide to return it.
However, these are my personal instruments, not a business sale.

[Mandolin Cafe]

We frown upon any seller asking you to pay this way. What they're asking for is essentially cash and zero protection against the sale.

Our advice: find another seller and send me a note through the contact form letting me know who asked. I just want to know who's up to this, will likely not act on it. Now, if you both agree to it, that's your business. Just don't contact the Cafe when you get burnt doing so.

Here's our official response: use Family & Friends and you lose all rights to contest the sale with PayPal. Ask yourself it it's worth it. This is getting increasingly on our radar as some try everything they can to get around paying for something that protects the buyer. Our job is to make sure buyer and seller are protected, not line the sellers pocket with a few extra dollars because they can get it. Zero tolerance for anyone abusing this.

[darrylicshon]

I only use friends and family when they are friends or family

[colorado_al]

I always state in my listings that buyer pays the PayPal fee and that I'll pay the donation to the cafe. If a buyer wishes to use "friends and family" payment to avoid the fee, that is up to them. I'm also happy to take another form of payment like a check or money order, etc. I've only done about a dozen transactions through the cafe classifieds, and most people, myself included, want the transaction to be fast, so they use PayPal, instead of waiting for checks to be mailed and cleared, etc. I normally will pay the 3% fee on items that I purchase, if the seller states it up front. Or if it is someone from whom I've bought before or that I've interacted with in the cafe forum, I'll use "friends and family".

[mandowilli]

From the Paypal user agreement:

You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services as long as the "handling" fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.

[Jeff Mando]

A $2000 instrument would incur a $58 PayPal fee. And may run over $50 to ship, so there goes over $100 in just those two fees.

Sounds pretty cheap to me, considering you are marketing a $2000 instrument. Contrast that with 15-20% consignment fee if you let a store sell it for you, which would cost $300-400. What am I missing -- other than nobody like to pay fees?

[Folkmusician.com]

What am I missing -- other than nobody like to pay fees?

I think that covers it pretty well! That and it does give dishonest sellers a way to limit the buyer's recourse.

[colorado_al]

I think it is important for the seller to state the terms of sale up front in the ad, and for a buyer to ask questions if there is any ambiguity. If you don't feel comfortable with the terms of a transaction, then don't buy it. The PayPal fee is a decent buyer protection, but not 100%. Buyer should also enquire about trial period and return possibilities.

[multidon]

PayPal fees are supposed to be paid by the SELLER. Period. When sellers use Friends and Family to sell to people that are neither so they can avoid the fee are in violation of their PayPal agreement. Ditto people who charge a 3 percent surcharge to buyers who want to use PayPal, but not to buyers who use any other form of payment. I’m sorry Al. You are just on the wrong side on this one.

When I sell something, I insist on being paid with PayPal, because they protect the buyer and seller. The fee is well worth it for the services they offer. And much less than any consignment fee if you sell through a store. If you sold your instrument through a store on consignment, would you expect the buyer to pay an extra 20 percent to cover the fee you owe to the store? And for another example, have you ever bought an instrument at a music store and been charged 3 percent more if you use a credit card? The store has to pay a fee to the bank that issues your credit card. But if they passed that cost along to you, that would be bad business. They could lose a customer that way. So they just chalk it up to the costs of doing business. That’s how I look at PayPal. It’s the cost of doing business in a safe and convenient way. That’s what you’re buying from PayPal. Safety and convenience.

[colorado_al]

Many vendors of all sorts charge more for credit card transactions, or conversely give a discount for cash. Gas stations are an example that I see all the time with different prices for cash or credit. I'm happy to take whatever form of payment a buyer is most comfortable with (though I'd have to think twice on bitcoin). And as I said, I usually use PayPal to pay from afar to a private party and I have no issue paying the fee to secure the transaction if it is stated up front by the seller. The other option is to inflate the price by 3% and pay the fee as the seller. Either way, the buyer is really paying the fee. I'd much rather be up front about it, and give the buyer the opportunity to save some money if they wish to. And to pay with whatever means they are most comfortable with. That is very far from insisting a transaction be made by "friends and family".

[Buck]

PayPal fees are supposed to be paid by the SELLER. Period. When sellers use Friends and Family to sell to people that are neither so they can avoid the fee are in violation of their PayPal agreement. Ditto people who charge a 3 percent surcharge to buyers who want to use PayPal, but not to buyers who use any other form of payment. I’m sorry Al. You are just on the wrong side on this one.

I agree, sort of. In reality though, the buyer always pays all the fees, and taxes, and utility bills, etc. even if that is not explicitly stated. When you buy something at Walmart, you are paying the credit card fee, and electric bill, and cleaning bill, and everything else. Walmart has no money. Only their customers have money.

However, I agree that any seller should abide by the terms of service. When I'm selling I figure out what I want for item, then I add in the fees for PayPal, shipping, and insurance before posting my asking price.

When I sell something, I insist on being paid with PayPal, because they protect the buyer and seller. The fee is well worth it for the services they offer. And much less than any consignment fee if you sell through a store. If you sold your instrument through a store on consignment, would you expect the buyer to pay an extra 20 percent to cover the fee you owe to the store? And for another example, have you ever bought an instrument at a music store and been charged 3 percent more if you use a credit card? The store has to pay a fee to the bank that issues your credit card. But if they passed that cost along to you, that would be bad business. They could lose a customer that way. So they just chalk it up to the costs of doing business. That’s how I look at PayPal. It’s the cost of doing business in a safe and convenient way. That’s what you’re buying from PayPal. Safety and convenience.

Dealing with a small business is not always like buying from a large retailer. I've often worked better prices on guitars by paying cash.

[FLATROCK HILL]

I wonder why people mention the Pay Pal fee anyway? Just how much does it amount to? Say an instrument costs $2000 (U.S. dollars)

Compare this to the fee one would pay from a credit card.

Many vendors of all sorts charge more for credit card transactions, or conversely give a discount for cash.

As far as credit vs cash purchases go, here's how it works. The buyer and the seller agree on the price to be paid. Then, should the buyer opt to use a credit card, he/she pays the agreed upon price. Period. Not a penny more.

In the event of face to face deal, cash might get you a better deal than you'd get with the C.C. transaction. If you're paying above the advertised/agreed-upon sale price for using a credit card, you're getting hosed. Find someone else to do business with.

[BradKlein]

Here's our official response: use Family & Friends and you lose all rights to contest the sale with PayPal. Ask yourself it it's worth it. This is getting increasingly on our radar as some try everything they can to get around paying for something that protects the buyer. Our job is to make sure buyer and seller are protected, not line the sellers pocket with a few extra dollars because they can get it. Zero tolerance for anyone abusing this.

The important info is contained in the Admin statement above. All vintage instrument dealers have different credit card and cash prices - however they choose to present it. It's not worth debating the merits of a 'credit card surcharge' vs a 'cash discount.'

[DougC]

. It's not worth debating the merits of a 'credit card surcharge' vs a 'cash discount.'

I agree. But a cash transaction is not really 'hard currency' doing business at a distance. Someone has to deposit a check, or do some kind of process to get the 'cash'. Is there not a fee for that labor?

A cash discount makes no sense to me in long distance transactions.

And really I'd rather talk about 'shipping and handling'. That is the deal breaker for me.

[multidon]

Charging the buyer a 3 percent surcharge for using PayPal and making them do Friends and Family are equivalent in that they are both ways of the seller trying to get out of paying the fee. Both actions also violate the rules you voluntarily agree to when you are a seller using PayPal. You can read the rules yourself. The difference is misuse of the Friends and Family feature also removes buyer protection. But both actions are violations of the rules.

I realize that many sellers might inflate their price to allow for the fees. But this is actually in compliance with the rules. It may seem better to be “up front” , and it might seem that PayPal encourages sellers to be disingenuous, but it is their company and their rules.

I personally find it annoying when a seller advertises their instrument at a price that “includes PayPal fees.” What they are saying is that they are inflating the price so that I am paying the fees that they are supposed to be paying. Honestly, it would be better if they didn’t say that, or mention fees at all. If the price seems fair, I’ll buy it, and assume the seller will pay the fees as they are supposed to. If they inflated the price, but it still seems fair, I’d really rather not know.

[Buck]

I personally find it annoying when a seller advertises their instrument at a price that “includes PayPal fees.” What they are saying is that they are inflating the price so that I am paying the fees that they are supposed to be paying. Honestly, it would be better if they didn’t say that, or mention fees at all. If the price seems fair, I’ll buy it, and assume the seller will pay the fees as they are supposed to. If they inflated the price, but it still seems fair, I’d really rather not know.

That's interesting, and not how I see it as a buyer or what I expect as a seller. I don't sell a lot, but I typically say something like, "Shipping, Insurance, and PayPal fees included." My intent is to let potential buyers know that I'm not going to ask them to use Friends and Family or try to add additional costs to my asking price. I always thought it would please potential buyers, not annoy them.

But again, the buyers are paying all the fees, always. The seller has a tangible item, not money. Even at a retail store all the credit card fees and other costs of running that business are built into the price of the item(s) and therefore paid by every customer interaction with the cash register.

[colorado_al]

For me, I just want the buyer to be comfortable with buying the instrument and use the form of payment that works best for them. Most everyone I've sold to here uses PayPal and pays the 3% - which is stated clearly in my listing as a condition of sale with PayPal - without a problem (as have I when I've bought from the cafe classifieds). I did have one buyer who wanted nothing to do with PayPal and sent me a personal check via USPS. I cashed it and sent him the instrument.
I think in many ways we're lucky that Scott has made this a reputable place to chat and to buy and sell. I can't think of any other internet forum that anyone would feel comfortable sending a personal check for $1000 with the promise of an instrument to come once the check has cleared.
So, regardless of where you come down on this topic, I hope everyone pays their 2% to the mandolin cafe to support this great site and the communication and trust that it engenders.
Thanks to Scott!

[jimmy powells]

Very interesting subject with great points noted. Seems the key one is the agreement terms with anyone who has a Pay pal account. You cannot charge the customer for YOUR SELLING FEES even if you genuinely feel they should be paid by the BUYER for HIS PROTECTION. I have a small hobby business (making football tactics boards) and a couple of years ago I was informed by Pay pal in a generic email to all users that I could not ask buyers to pay extra for using Pay Pal. End of story. I just have to accept it but when I get an enquiry I usually suggest a bank transfer with no fee to anyone.

Thanks to Scott for his reply. Possibly a good idea at some stage to highlight this up on front page or similar. I'd hate to see someone use 'Family and Friends' and then find that the deal goes wrong and they end up with no refund from Pay Pal.

[DougC]

There are other companies like Pay Pal working very hard to compete with them.

[OneChordTrick]

When I sell stuff (usually low value bike parts) I assume that I’ll be paid by PayPal and price accordingly. If I receive payment by friends and family I just view that as a bonus but don’t expect it

[Folkmusician.com]

I am not a big fan of PayPal, but it really is a great thing for personal sales or small time sellers that can't justify a merchant account. By industry standards, it really isn't a high fee. Most merchant accounts have extremely complex billing, where you are paying different percentages for business credit cards, Amex, Discover, rewards cards, online, international, etc. So said merchant account might be for 2.2%, but after all the Interchange fees are calculated, the merchant is paying 3%.

As a buyer using PayPal, you have a great deal of protection. In the vast majority of disputes, the seller loses. I actually did get seller protection for a fraudulent $800 order from December. If this would have been through my merchant account, I would have lost the money PLUS a chargeback fee, Wouldn't have mattered that I had a signed delivery receipt from the billing address and all info matched that on file. So here, PayPal saved me $800.00. Again, not usually the case. I have had my PayPal account since PayPal existed. It has received payments in the 7 digits, and it doesn't take 5 fingers to count the times I won a dispute as a seller. So I am not a big fan as a seller, but they really do a lot to protect the buyer (same for any credit card transaction). And in this recent case, me the seller.

The classifieds here are exceptionally safe. It is really pretty crazy, considering that we are talking about high dollar instruments being sold from various parts of the world. Talk about a perfect target for criminals (and I am sure they try), yet, I don't recall a single report of someone actually being ripped off. I sure can't say the same for eBay! haha That is really what it comes down to, who you are dealing with.

So yeah...

regardless of where you come down on this topic, I hope everyone pays their 2% to the mandolin cafe to support this great site and the communication and trust that it engenders.