eBay CEO John Donahoe said last month that PayPal will be a bigger business than eBay. PayPal made $1.8 billion in revenues while eBay’s total revenues were $7.7 billion in 2007. Given that PayPal is making a boatload of money for eBay since the service is used by millions of people, I could only imagine that they would somehow find a way to make additional revenue. Profits is the name of the game in our corporate world.
PCWorld editor Jared Newman first noticed PayPal increasing their fees since that directly affected his paycheck. PCWorld pays their editors through PayPal itself. Although the commissions PayPal takes are not massive, it is still fairly noticeable. PayPal takes 2.9% of the total transfer amount plus 30 cents for transactions involving goods or service. PayPal still allows free transfers for personal accounts intended for friends and family, but PayPal absorbs the commissions from business accounts.
The biggest mistake was that PayPal added the charge discreetly. There was no big announcement made regarding the change in terms of service. The blogosphere and Twitter users were outraged. Because of this PayPal had to write a blog post clarifying the changes.