ARC - PayPal and Credit Cards

As some of our customers are aware, for the past few months we have limited the amount of payment which we accept through PayPal, to £100.00. However, now due to growing security concerns, ARC has decided to stop accepting all payment by PayPal service for an indefinite period. This policy will be implemented during next week.

At the same time, ARC will soon charge a £1.00 surcharge for accepting payment by credit card. There will be no surcharge if payment is made by debit card. We are having to implement this charge as we are seeing a growth in use of credit cards where the users get loyalty points/benefits/zero or low % interest rates, and in turn we are being charged a high rate of interest for accepting such cards. The £1.00 surcharge for use of credit cards is lower than the average cost we incur for processing all credit cards (not debit cards).

This decision has been made after a lot of thought, over time. We appreciate that we live in a competitive global market, and we are very much aware that our customers have an ever growing choice of suppliers. So, these changes could effect the amount of business we could loose by implementing this new policy. We apologise for the inconvenience this will cause some of our customers. At the same time, we hope that our explanation will help people understand the reasons for the change in our policy.

Ketan at ARC.

Hi Ketan

Thanks for your honesty regarding additional charges incurred for cards that offer the cardholder some incentive.

but isn't it the case charges for use of a credit card are limited in some way. ?

Will the use of a Debit card remain FOC ?

Rgds, Emgee

Ketan

I don't expect you to give a direct answer to any difficulties with Pay Pal here but can you point me in the direction that will give some indication of any problems with that service?

Thanks in anticipation

Norman

Hi Ketan,

Thank you for the explanation. I understand your position but it is a bit of a shame as I tend to make smaller purchases which will be penalized disproportionately and I am very reluctant to use my debit card for on-line transactions for the reasons detailed here (nothing personal to ARC)...

**LINK**

Are you still accepting telephone orders as that would overcome my issues with on-line debit card purchases?

Many thanks

Jon

I looked at your link Jon and it does not really give a proper picture. I could go on for some time (I will spare you all) but if your Debit Card carries the Visa or Mastercard Logo's you ARE covered under the act.

Furthermore, it does not mention that the transaction must be for the sum of £100 or more. The issues you have require a bit more clarification because a Cardholder not present (Telephone order) is the same as an Internet purchase and fall under the Distance Selling regulations- and you will have noticed some changes as the European version must now be adhered to.

Norman, there is not enough room in Cyberspace to tell you what is wrong with Paypal if you are a seller. I no longer accept Paypal payments at any of my online shops as you have no protection against so-called "friendly fraud" (Americanism, sorry).

Ketan, bury the £1 in your product somewhere, customers really don't like it. Been there, done that.

graham.

Ironically, nothing to do with ARC or cards but I have made two purchases this week from Ebay.

Both, and neither are related have a similar message "Due to high Ebay fees we are moving our entire stock to our own site " then details which go on the say the saving on fees will be passed on. etc.

Hi Graham,

Thanks, I appreciate your comments but I will still not be risking my debit card on-line as it could expose my current account.

Credit cards IMHO represent a pretty good way of ring-fencing on-line exposure and losses.

The risks are real and there are new vulnerabilities exposed every day.

Jon

Here in France LCL have an e-Carte Bleue. You go to your bank online and generate an individual card number and security code for the specific amount. This is then only available for the specified amount thus limiting the loss, and if the supplier cashes in straight away the number is then blocked for any further use, does this facility exist in the Uk? and if not why not!

JES

I have been charged extra by a corner shop for using a DEBIT card (taking advantage of less well off customers who have along walk to a cashpoint).

I do know that credit card charges are getting ridiculously high for small purchases. The likes of Lidl, Aldi and my local steel stockholder simply won't accept them (they are fine with debit cards'.

My advice for anyone worried about safely making multiple small purchases would be to get one of the debit cards you can load with small amounts of cash for a relatively modest fee (as often used for giving kids their pocket money). As these cannot be overdrawn, this would automatically limit your vulnerability to fraud.

Neil

Following on from Neil's message

Another option (Cheaper than a cash-card) is to open a second bank account and get a debit card for it and use that. Just transfer the funds into it when required.

Dave

Hi Emgee,

Charges for accepting credit card are variable, depending on too many factors, depending on who is the credit card issuer, how low or high the incentive is, through to the volume of business and value of transaction being put through the credit card processing system by a seller. In this respect, we are regarded as a small seller, so the processing charges we have to pay for accepting credit cards are high.

We will continue to accept Debit cards without adding any surcharge for the facility.

Ketan at ARC

I look for what I want on ebay, then contact the seller direct, it is always cheaper. I use ebay as a search engine really and ebay know we do this. They have stopped you sending your email address via their message system but that is not hard to circumvent, you just need to be creative.

Try selling stuff on Amazon (I do) And you will find their fees are eyewatering. You are looking at at least 17.5% of your transaction as fees and it can easily hit 20% - they even charge you to come at the top of their own search results! But it it a good way of getting a brand into the marketplace and much cheaper than Google Adwords. It is un-sustainable as a business model though.

graham.

Hi Norman,

Yes, have a look at PayPal policy around the use of the words 'Person verified by PayPal', 'Delivery Address Confirmed by PayPal', 'Dispute process'. These three areas are commonly used by certain buyers, as well as PayPal, to excuse withholding of funds, or commit fraud. At this point, I have to leave you to paint your own picture, as there are good as well as 'too clever' people reading this thread.

Unlike banks, PayPal is not governed by any financial institution in the world. They are free to make up their own policy which is loaded in their and the customers favour. Whilst being well meaning for the customer, it is open to fraud due to the 'revocable' nature of funds being offered in a transaction.i.e.fund with strings attached, like money attached to the end of a fishing line. You can put the money in your pocket, but PayPals hook is linked to it, for it to remove out of your pocket when it feels like it.

So, if there is a 'dispute' raised by a buyer, the automated system first withdraws the funds from the sellers account, and tells the seller to show/prove why he should get paid. For this, the seller has to jump through a series of hoops. Again, whilst being well meaning, it is VERY open to abuse. We have gone through this process several times. We have won each and every dispute. PayPal does not consider the sellers history in any way. The process is more like 'you are GUILTY' and you have to prove your innocence.

With debit/credit card processing, the dispute resolution process before charge back is a lot more civilized. In our experience, the card issuer appoints a person to look into the dispute - regardless of order value. The investigator looks into the card processing history of the seller. they have security systems in place. Then he/she will call the seller regarding the dispute, to hear the sellers side of the story. Then the investigator make a judgement on charge back. In ARCs history, we have had two such disputes, both of which have ruled in our favour...so far.

This situation of PayPal is very well known to sellers, and ALL regular legitimate sellers have gone through this process. Many are afraid of loosing business if they refuse to accept PayPal. Financial Regulatory Authorities, and Politicians concerned are well aware of PayPal and related eBay operations, but they choose to turn a blind eye for what every reasons.

Ketan at ARC.

Jon,

Yes, we are still accepting debit or credit card purchases over the phone. The £1.00 surcharge will only apply to use of credit cards, be it over the phone or over the website.

I also read the link you gave. In an effort to give you some assurance, when a seller goes through the application process to accept payment on-line, we have to give certain guarantees and assurances to the service providers, to offer 'comfort' against fraud. In our case, such guarantees are given to 'WordPay' - previsously Streamline - the acquirer of the payment, Sage Pay - which is the on-line payment gateway. As part of this 'comfort' we also have to provide a 'secure' platform to enable the customer to pay.

When you 'Register' or 'Login' to our website, look at the URL. It will change form www. to https:. Once you are onto a screen with an https: URL, you are putting your details onto a secure platform, and any information which you enter there on is 'secure'. ARC pays for this extra level of 'comfort' and security.

Also, for regular visitors to our site, we will be enabling the 'remember my card details' option in a similar way to Amazon. This information will not be held by us. It will be held by Sage Pay - the security gateway service provider, which is an independent body.

Ketan at ARC.

I agree we live in a global market, but you also have a reputation for excellent service which gives you a captive market, of which I'm happy to be a member. So a small surcharge on credit card transactions is hardly really onerous. On Ebay I only use postal orders, which limits my loss, and ensures the trader gets the money, and doesn't compromise my bank account or credit card. I avoid PayPal like the plague.

(Just wondering - will this surcharge help towards paying for JS's bag of chips ? (grin))

Dennis

.

Glad you reminded me of this, it's now up to 3 quid after the last trip.

Hi Graham,

Did think a lot about this. Then went and checked our payment processing records over time, and noted several points:

1. A good number of customers were paying by debit card - Good for them. No charge.

2. Initially reducing the order value to £100.00 max on PayPal moved over more customers to use debit cards, and few onto credit card.

3. Over the past year and a half, where credit cards were being used, the processing charges have been increasing. So I examined the type of cards being used and noted that more of such cards carried a higher % fee. The average increase was 0.5% across the range of credit cards. It doesnt sound a lot, but it is a lot in money terms, even though it effected a limited number of customers.

Over the past month, I have already increased product selling prices by just over 1%. This is to pay towards cost increases for purchases from South China for general consumables, which have risen by between 30% to 50%.

As a matter of 'loose' principal, I too would not like to pay the £1.00 surcharge for using a credit card. I don't really know how this will develop. At the same time, the way I see it, a good number of my customers are paying with debit cards, so this change should not effect them. Considering a parallel 'loose' principal, it is difficult for me to consider to bury or increase the selling price by a further 0.5% for consumables, in order to service the less customers wishing to pay by credit card, at the expense of more customers paying by debit card.

Ketan at ARC.

While no one like to pay "extra" charges, it does show a transparency on behalf of the vendor about what you are getting and the true cost. Nothing is for free in this world. Charges are generally hidden in the product cost. Use of Credit card costs the vendor, so why not pass the charge on?

I know what your're saying Graham and sympathise, but I'd like to highlight something;

As the old saying goes, "you don't get awt for nowt" (that's probably just how they pronounce it where I'm from.....).

If people wan't to use credit cards with benefits, fine. If the retailer has to pay, and then spreads that cost to all its customers as an overhead - that's not fine. We're basically then allowing banks to take money from retailers and give it to people with credit cards in order to promote them to "borrow" money on their cards - it stinks.

I know you're not suggesting this is acceptable - but what your saying is tactically, this is the easy option, bury it and lets all just go down that path and allow it to happen, this silly card benefit bubble has to burst, or we'll all be paying for it not just it, but the increase in overheads required to deal with it.

Arc get my respect for telling us what's going on - I'd like to see that explanation on the website next to the £1 surcharge to enlighten people.

Edited By Russ B on 07/08/2014 12:51:43

Russ B,

Graham and you are both right.

For sellers, the main driver is 'fear'. Which path to take - the easy one, or the difficult one for fear of loosing custom?

It is an element of fear which drives me to put up this thread, to provide an explanation for the difficult decision. To enlighten people in this way/media is easier then trying to find a way to explain in detail on our website, next to the surcharge fee. I will have to work on a way to communicate this message 'of why', perhaps via a 'link', without offending or putting off potential buyers.

Thanks, Ketan at ARC.