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Saturday
Apr092011

eBay is Double Dipping

Did you know that eBay owns PayPal? Most casual sellers and buyers use PayPal to buy and sell on eBay. However, eBay is helping to fatten their PayPal division by double dipping with their fees.

We know that eBay charges many fees. The worst of them is the Final Value Fees. Their listing fees are usually pretty small though. To simplify, you're basically charged 9 to 10% in fees just by eBay alone.

The person pays for the item, with shipping, which means PayPal will see a transaction that is usually slightly higher than the winning bid, and charges you around 3% in fees from that. The double dipping occurs where PayPal is charging the 3% from the transaction before eBay takes out their hefty Final Value Fee instead of after, giving them a few more of my moola.

Here's a good real life example. I just sold many things on eBay, but I'm going to use a single item I sold. I sold a Samsung Galaxy Tab for $403. Shipping was $12, so the total transaction would be $415.

eBay charged me $36.27 worth in fees based on the winning bid of $403. The buyer paid $415 (remember the shipping), and so PayPal took 3% off that, in which they charge $12.36. Remember that shipping is $12, which I have to pay USPS.

Here's the math:

415-36.27-12.36-12= $354.37

That's a far cry from $403, huh? That is about 12% less than the winning bid. That's all going to eBay!

The math would be slightly in our favor if eBay took their Final Value Fee before asking PayPal to process the transaction, since it will take 3% off $378.73 instead of the full $415. Here's where i got that number from: (403-36.27+12). Based on what they charged me in fees, that comes to a penny less, sure. But imagine if you were processing millions of transaction that way! I'd be rich if I stole a penny from everyone I've ever met!

The real double dipping is that they charge you at all on PayPal. They are both the same company! If they can eliminate the 3% fee for just eBay transactions, it would be a step in the right direction. Of course who are kidding? What we really want is eBay to lower those Final Vale Fees!

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