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eBay Positions PayPal as the Only Safe Payment Option

January 13th, 2007 by Skip McGrath

eBay is discontinuing it’s Standard Purchase Protection Program so only buyers who use PayPal can make a claim to get their money back.

For years eBay has offered the eBay Standard Purchase Protection Program. This meant if a buyer got screwed they could file a claim through eBay, pay a $25 processing fee, and eBay would refund their money up to $200.

Soon after eBay purchased PayPal, the PayPal Buyer Protection Policy was made and all buyers who used PayPal were sent over to their system to file claims. So eBay only dealt with check, money order, or other approved online payment service claims.

As of next week, there will be no protection policy for any of these non-PayPal payment methods. This is a bold move for eBay particularly as the redesigned BidPay system is once again gaining ground. It is a clever ploy though, and really the only legitimate way eBay can give PayPal the monopoly on payments.

There is some good news though. PayPal will cover claims up to $200 with no processing fee. Which is great for most buyers. For those buying high ticket items, PayPal Buyer Protection will now cover up to $2000 (but with a processing fee). This is twice what it used to be.

The annoucement should make stock holders happy because some non-PayPal transactions do tend to be a little riskier than PayPal ones, so this is a good change from a risk assessment point of view. It also means they should see a jump in transactions through PayPal (and therefore fee revenue), so don’t be surprised if eBay stock prices increase.

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