Please bear in mind that this guide was correct at the time of writing, but eBay change policies/fees fairly regularly!

Contents:

1. Paypal Merchant Rates
2. Paypal Micropayments
3. Paypal E-Cheques
4. Cross-Border Transactions
5. Paypal Chargebacks
6. eBay/Photobucket Picture Hosting

1.)  Are you a high volume seller?  Received more than £1,500.00 GBP in PayPal payments in the previous calendar month?  You are entitled to a Paypal 'merchant' rate.  Rates for each payment are shown below:

Monthly Sales                                                       Transaction fee for each payment
£0         - £1500                                                    3.4% + £0.20     (This is the initial rate for all Paypal accounts).
£1500   - £6000                                                    2.9% + £0.20
£6000   - £15000                                                  2.4% + £0.20
£15000 - £55000                                                  1.9% + £0.20
£55000+                                                               1.4% + £0.20

Paypal do not automatically allocate your account a merchant rate - you have to ask them.  Links can be found by typing 'Merchant Rate Criteria' into Paypal Help.

Once you have initially applied, there is no need to re-request; for example, when you move up a payment level; Paypal automatically allocate you a lower % merchant rate.

2.)  Do you sell mostly low value items under £9.50 (including postage)?

You should apply for a Paypal Micropayments account.  Micropayment accounts offer a fixed rate of 5% + £0.05 per transaction.  This works out increasingly cheaper (compared to standard Paypal accounts) as the price of the item drops.  For example, sell an item for £2.00 and receive payment to a standard Paypal account and it will cost you £0.27 in Paypal fees.  Sell the same item for £2.00 and receive payment to a Micropayments account and it will cost you £0.15 in Paypal fees.  A saving of £0.12.  The break even point is approx. £9.50.

Remember, if your standard Paypal account is at a merchant rate, the break even point will drop slightly for each merchant level - a standard Paypal account with a 1.4% Merchant rate will still be cheaper right up until around £4; anything less than £4 will attract less fees with a Micropayments account.

It is possible to switch a current account to a Micropayments account, however Paypal customer services don't seem to realise this!  I would advise opening a completely new Paypal Micropayments account (you will need a separate bank account) as this way you can direct different value payments to each account depending on their value.  This will obviously be most effective if you sell Buy It Nows.  Auctions are unpredictable, but you can still list items with the different Paypal accounts depending on what you think that they will sell for.
To change which Paypal account you receive payments into, make sure that you enter the corresponding email address in the 'Payment' section of the sell-your-item form.

Note that Micropayments do not apply to cross-border transactions, regardless of value.

3.)  The vast majority of listings on eBay are now forced to accept Paypal.  This can be quite expensive, especially if you are selling high-value items in the £100s.

One way of reducing these fees for high value payments is to offer the Paypal E-Cheque option to buyers.  As the maximum charge for a Paypal E-Cheque is £3.50.  This includes cross-border payments.  E-cheques now take less time to clear than they once did, but the average clearing time is still around 10 days which is significantly longer than a normal cheque so you should make your buyers aware of this.

As an example, a £500 transaction would cost you £17.20 in Paypal fees.  If the buyer paid by E-Cheque however, the fee would be just £3.50, a saving of £13.70.

E-cheques are also safe from chargebacks, even if the buyer has an 'unconfirmed' Paypal address (this is covered further down).

4.)  Many sellers don’t realise that Paypal charge extra when buyers from abroad make payments.  The charge is 0.5% extra.  The table below shows the fees.

Monthly Sales                                                       Transaction fee for each payment
£0         - £1500                                                    3.9% + £0.20
£1500   - £6000                                                    3.4% + £0.20
£6000   - £15000                                                  2.9% + £0.20
£15000 - £55000                                                  2.4% + £0.20
£55000+                                                               1.9 % + £0.20

There is no easy way around this.  But I would advise all sellers to actively offer International Bank Transfer as a payment option, especially for European Union countries.  Banks do not charge extra for Euro transfers from anywhere in the EU (Natwest and RBS do charge a £1 fee for an advice letter – some people have successfully opted out of this ridiculous letter scheme).  There may be a charge for £GBP though, so make sure the buyer pays in their currency.  All the buyer needs to make a payment into your bank account is the IBAN and BIC numbers which can be found on your bank statement.

Many people are over-cautious about who they give these details to, which is a shame, as they are a completely safe payment method for sellers.  German buyers in particular love to pay by bank transfer.

5.)  Paypal Chargebacks.  If you are a high-volume seller, you can expect multiple chargebacks per year.  Most are fraudulent, but it is often impossible to prove so.  They occur when a buyer informs their bank that they did not authorise a transaction/s from their Paypal account.  Their bank then reverses the payment and Paypal is legally obliged to refund the money.  Unless the transaction was marked as ‘Eligible’ in Paypal, the money will all be reversed from your account, and on top of that, Paypal also charge you £7 for the priveledge.

So how to avoid this??  Well the easiest way is to only send items to ‘Confirmed’ Paypal addresses when the Paypal transaction will almost always be marked ‘eligible’ for seller protection.  However, around 25% of buyers don’t have a confirmed Paypal address (this doesn’t necessarily mean that they are up to no good) so you will inevitably lose sales by doing this.  In my opinion, you should implement a cut-off point, above which you insist that buyers must pay using a confirmed Paypal address.  Say around £50.  State on your listings that anything above £50 has to be paid for using a confirmed Paypal address.

Chargeback scammers are most likely to buy items worth £100s, and are unlikely to target low value items.  Also, try to use your common sense when dealing with unconfirmed addresses e.g. antique sales are less likely to attract scammers than Nintendo Wii sales, for example.

You can also examine the buyers previous buying history by using the ‘advanced search’ on eBay.  Select ‘Items by Bidder’, then type in your buyer’s User ID and tick the completed listings box too.  This shows you all their purchases during the last 30 days.  If there is a high amount of spending occurring, this should ring alarm bells (but only if the buyer pays using an unconfirmed Paypal address).

Finally on this point, eBay offer you the chance to participate in the ‘Paypal preferred’ programme.  You can opt into this in your eBay preferences.  Should you ever receive a chargeback from a buyer on a transaction that was not eligible for seller protection, Paypal will waive the £7 charge which you would usually be stuck with.  Paypal do not actively advertise this feature, but it really is worthwhile as it does not cost anything extra and could save you money in the long-run.

6.)  eBay charge 12p per picture to use their image-hosting software.  And pictures are essential to achieve the best possible price for your item.

To avoid paying the 12p, open a 'photobucket' (PB) account, or another similar image hosting site.  There you can upload images from your computer and using the links provided, you can transfer them to the eBay 'sell your item form'.  This is completely free, and unlike eBay's hosting service, there is no limit as to how many photos you can add to the listing.  So potentially massive savings.

Note that you should consider making your PB account 'Private' so that people are unable to nosey through all of your pictures.  This can be done in your PB settings.

You can also upload videos onto your eBay listing using PB but this requires a subscription service and is only really worthwile for high-volume sellers.

Under construction... :)

If anyone has any questions/comments please message.