artists_beware | Advice: PayPal Fees on Refunds

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Advice: PayPal Fees on Refunds

Greetings,

I had a commission which I originally paid for on 2012-06-30. The artist has decided to refund my money rather than finish the commission at this point. This was her decision and not mine. However, the way the refund is being sent, since it's too late to issue it as a refund through PayPal, I'm being charged £1.57 in PayPal fees if I accept it because she's sending it as a regular transfer. I feel like the artist should be responsible for the fees, since she decided on the refund. If I gave her £35, I feel I should be receiving £35 in return, either with her sending it as a gift (I'm not sure how this transaction should be handled, because it's definitely not for goods or services, but it's not exactly a gift, either...) or with her using a calculator to figure out what the fees are in order to cover them.

I'm actually losing even more because of PayPal converting from USD to GBP and then back again. I originally paid $56.29, but if I accept this, I'm only getting $51.92 from PayPal. I've told her I don't expect her to cover the currency conversion, but that I do think she should cover the PayPal transaction fees.

At this point, I'm expecting her to cover the fees, but not the currency conversion. Since I paid her £35, I think I should get £35 back. Her prices are in GBP, so I understand taking the loss on currency conversion.

What would you expect? Would you cover the fees or expect the artist to cover the fees? Should I ask for the funds in USD rather than GBP?

Thanks for your input!

Edit:
First of all, I want to make it clear that the artist wasn't difficult to deal with, and that I wasn't intending to post a beware at any point on this. Second, since I've never dealt with a refund from an artist before, initiated from either end, it was something new for me, and sometimes with anxiety things seem like a bigger deal than they are, but I was also genuinely curious how this should be handled, especially since with larger amounts it could definitely add up. Then again, I've seen bewares posted for art that's cost less than $3, so I suppose I'm not sure at what point it matters and what point it doesn't. I certainly don't mean to seem petty or anything, but it mostly that it was a new situation and I wasn't sure how to handle it. I didn't mean to give the impression that it was a long fight with the artist over it, just more me asking what I should ask for in this situation.

Anyway, in the end, the artist resent it as a gift, so there weren't any fees, so all is well. I appreciate the input!

Edit 2:
I just want to make it abundently clear that I am in no way upset with the artist or trying to say she was difficult to deal with. I had never handled a refund before, so I was seeking advice on what I should expect. Thanks again for all the insightful answers.

Flat | Top-Level Comments Only

I'd expect a refund and not hassle about fees. More than likely the artist didn't see the full amount either, as sending a regular transaction takes fees from them as well. The fee is there for the use of the service. If you don't want to incur fees, then it could easily be sent via another avenue.

With that said: Artists? Sending refunds via your Paypal balance vs. pulling from your debit card/ bank account/ credit card will incur no fees for the client. The same goes if the client transfers from their balance.

^^^^ This

Actually, there's no reason the artist can't see the full amount, since when I view individual transactions on Paypal, I still see the full amount displayed, then it shows me the amount it took out for fees. I also get emails from Paypal when people send a payment, and the email displays the full amount they sent as well. They also should be sending it as a gift if they can (which doesn't incur transaction fees, just a very tiny currency conversion fee), but of course, it might not be possible to send as a gift. I know in Germany that option isn't available, so maybe it's not in the UK. But the artist should definitely be able to see the full amount if they check the individual transaction.

I meant "see" in the sense that the artist probably had fees taken out themselves in the first place so they didn't get the whole $30. Which it's fine that they eat the initial cost of fees in the transaction as that's their responsibility. When it comes to gifts the sender pays them, so yes there are fees associated with gifts.

So if someone paid me $30 usd, I'd only get $28. If I refunded plus enough to cover fees, then I'd be out $4 theoretically regardless if I sent it regularly or via gift. That is unless the client is willing to wait the 3 business days it takes to get Paypal to do a balance transfer from the bank. There are no fees associated with Paypal balance transfers.

Edited 2014-11-06 01:33 (UTC)

There's no fees associated with gifting money via your bank account either though? I do it all the time with a $0.00 Paypal balance and there's never a fee for it. There's also never been a wait for the people I send money to either--they always receive it automatically. The only wait is for it to show up on my bank account, which generally takes 2 - 3 days.

So really, if you refund the original $30 by sending it as a gift, you should only be out $2 because there shouldn't be any fees by gifting it, assuming you're pulling it directly from your bank account and not using a debit/credit card.

But like I said, it might be different for this artist since they seem to be in the UK, as every country has its own rules, and some countries don't allow for gift payments. But if the artist *can* send it as a gift, there's no reason not to. For countries that allow gift payments, it seems to work the same as in the US--no fee except, for currency conversion, and it's pulled directly from their bank account. And the currency conversion fee is minuscule--for $50 it'd be 25 cents. For other countries, it's the same numbers, just in their own currency. So if the artist sends OP the refund as a gift, the only fee they should have would be 18 cents for the conversion, then they'd only be out the original fees plus that 18 cents. OP will be out money either way too, due to currency rate changes between 2012 and now...so if it's possible for the artist to save OP the cost of seller fees, they really should, I think.

Edited 2014-11-06 02:54 (UTC)

After I edited my comment I logged into Paypal to see for myself. Yeah, bank accounts don't charge fees. I think they used to at one point, but I've never had to issue a refund.

But if that's the case then the whole issue is moot unless you're paying via credit card or debit card. In which case, I wouldn't even bother someone about the fee. For me it just feels petty considering how tiny Paypal's fees are in relation to other services. I personally will not hassle someone over a few dollars.

Yeah, I think OP is asking about this at all because the artist wants to send it as goods/services and not as a gift. The latter wouldn't charge OP any extra fees, but the former does. It might be less about the money and more about the principle of the matter. Because if the artist *does* have the ability to send as a gift, then they'd essentially be cheating the OP out of money, even if it's a really small amount.

But if their country doesn't have the gift option, then...I dunno. I mean, if that's the case, it's not the artist's fault, but at the same time it's not OP's fault either and they'd be out money after waiting 2 years on a commission. If I were the OP and the artist in question wasn't able to use the gift option, I don't think I'd make a fuss about it. But at the same time, in the artist's shoes, I think I'd automatically cover the cost of the fees because I made them wait 2 years for nothing.

There's more to it then just not wanting to use the option. I run an online fursuit making business primarily through paypal, if I get income come in through paypal I have to declare it for my taxes at the end of the year. If someone paid me $1000 for a fursuit and then decides that they want a refund after the 6 month point, I'm definitely not going to send it back as a gift, because it isn't a gift. It's a loss of income that I need to keep track of for my accountant so I'm not taxed on $1k that I don't have.

I know that OP's case is a lot less money and probably a fairly different situation, but I just wanted to put in my 2 cents to let you know sometimes why artists wouldn't send a refund as a gift. :)

Well, I guess part of it is that it wasn't my choice to do the refund, and the other part of it is that if I used my card at a shop, they'd refund me the full amount I paid and they'd deal with all the fees with their processor. I've never done a refund with an artist before, so I'm not quite sure how to handle it...

My advice to you would be to just ask the artist, directly and politely, *why* they're not sending it as a gift. Then, depending on the info you get, I guess you'd have to go from there.

Well, she resent it without the fees, so I'm not really sure, to be honest. It's not really worth asking now; I don't want to bother her about it. Could've been she just didn't think about the fees when she sent it.

That's a good point, and I get it, but I'm more interested in understanding this particular artist's reasoning, I guess? If the artist in question is running an actual business, then that's a thing to consider. There's a possibility that commissions might just be a little extra side income that they don't claim on their taxes. (I also wonder how the whole tax thing works after more than 2 years...taxes are such a pain.) Either way, I don't think it matters too much, because what I'm thinking is that the OP shouldn't be left in the dark on the matter--regardless of the reason for it, the artist should be explaining to the OP why. That's my point of contention here, I guess.

Well, how you classify a payment on PayPal has no bearing on how you have to claim it on your taxes. You can claim it as whatever you want, really. If that were true and she sent it as payment for services/goods, then I'd have to file it with my taxes as income. Can always make a note in the comments or whatever that it's a refund so when you're reviewing at tax time, you know exactly what it was for.

Actually, it does have a bearing on how you claim it on taxes. You don't claim money you've spent on non-business things on your taxes, nor do you claim money you give to individual people as a gift, but you do claim money spent on the business as a loss. And you're only half right about your own taxes. If you had a business and you used Paypal for it and someone sent you a payment for "goods/services", then you'd have to claim it. But, if you don't have a business like that, it's not a big deal if you don't claim that income. The IRS doesn't really care about people selling their old Pokemon cards for $10 on eBay, or people making $50 at a yard sale. Likewise, they wouldn't care about you making a small amount of money on some one-off thing.

There's also the fact that she lives in a different country from you. You never know how taxes work for other people. Taxes are, after all, ridiculously complicated.

Taxes aren't based on how PayPal classifies their transactions, though. It's all based on how you claim the transactions on your filings to the IRS.

You can't just file random stuff on your taxes. You have to show proof of your earnings. If you run a business through Paypal, you're pretty much going to be showing them your business transactions on Paypal. Trying to claim things sent as a gift would amount to fraud.

Well, I guess first of all, I've never done a refund with an artist before, and I'm not the one requesting it. I'm more used to the traditional sense of things like if I used my card at a store and then returned a product, they would put the full amount back on my card and there wouldn't be any fees for me, it would be something they all cover through their card processor. I've just never really been in this sort of situation before, so I'm not sure what I should expect, I suppose. Hence why I asked.

Paypal has a refund feature that also refunds the fees. Ask them to find your original transaction and initiate the refund through there.

If it is past a certain number of days (I forget which) then it might not be an option any longer. But Refunds are a specific category that paypal is capable of.

From the post:

However, the way the refund is being sent, since it's too late to issue it as a refund through PayPal...

The limit is 100 days.

I think if the artist was the one to cancel, then yes, they should ensure that you get the full amount returned to your account.

That said, if it's just a piddly amount like it is here, I'd just drop the issue and never work with that artist again.

Well, I know it's not a lot of money or anything, it's just more of the principle of the matter. I kind of feel like if I sent 35 GBP and the artist chose to cancel, I should get 35 GBP in return. I mean, at what point do I call it the limit? That being said, I've never had to deal with a refund with an artist before, so this is all kind of new territory to me. I don't want to be difficult and make a fuss, either. I'm just not sure how to handle it, I guess.

I understand about principle, and it is frustrating, but if the artist is hard to deal with, then you may be in for a lot of frustration over a very low amount of money. Basically- pick your battles.

Oh, well, I'm not trying to say the artist is hard to deal with or anything like that. It's more just genuine curiosity on what would be expected in this situation, I guess. It's new territory for me, and that can be difficult sometimes.

Artists should totally pay the fees if they have passed the refund time. Typically I refund as a gift payment to avoid fees for the user. That or just send the amount in fees you know that would be charged using the 'Paypal Fees Converter' etc.

If it's past the 100 day mark and a refund is being sent [regardless of who requested it], I send it as a gift so there are no fees removed from the client. Yeah, it's not exactly a gift, but it's definitely not for a service. I paid for the fees when I accepted the payment, so IMO, PayPal still gets their cut and nothing shady is occurring.

PayPal pays out a percentage of refunds when you use their refund feature, so actually doing it this way, they get more than they would if that feature was used.

Edited 2014-11-05 22:27 (UTC)

They should send it as a gift to avoid the service fees. I'm not sure what to say for currency, part of me thinks the artist should refund you in the same currency you paid them, but I know how much conversion fees suck. Might be best just to ask if they'd refund in your preferred currency.

Honestly, I'm fine with taking the currency hit. I'm just not sure how to act with the fees. I mean, if I paid with a card at a shop and then got a refund, I'd get the full amount back and they'd cover all the fees with their card processor. I know it's a small amount, but I've never really done a refund with an artist before, and I'm just not sure what's expected in this situation.

When I send refunds (of my own choice) past the allotted time, I always cover the fee. It's a courtesy since it was MY choice to refund, so I should take the hit, not the commissioner.

I'd normally say yes the artist should cover the fees but..it's £1.50. You can't even buy 2 cans of Coke for that. I'd just leave it and if you're not happy with how things went down, don't work with the artist again - but with such a tiny sum it's not beware-worthy or anything.

Well, I'm not posting a beware, I'm just asking advice. I've never dealt with a refund on either end of a transaction before, so I'm not sure how to handle it. I'm also not sure at what point it's worth making the fuss and what point it's not. I guess part of it is just principle.

I suspect Paypal's refund function should send the entire amount back, maybe minus the initial fee, without any extra fees. That said.

If artists can't charge extra to cover their fees, should they give extra to cover the fees of a refund to a customer? :/
I can imagine that it feels unfair to be shorted when an artist refunds you, but it also doesn't look good to kick up a lot of dust over £1.57

Odds are the artist has a GOOD reason to refund you, like if they feel they can't give you your work, that you paid for, within a reasonable amount of time, if ever. Or can't give you something of sufficient quality. They might even not be happy about their customer for some reason and no longer feel comfortable doing business with them.

Artists don't refund for funsies, and you have most of your money back, that's more than most people who post here get.

Well, I'm not meaning to kick up dust about it, and I'm not posting it as a beware. I'm genuinely curious, especially since I've never dealt with a refund, initiated on either end, with an artist before. I guess, if I went to a shop and paid for something with my card, they'd cover the fees, but if I went for a refund, I'd get the full amount I paid, no fees subtracted from my end. I'm really just not sure, and it's also kind of a question for if it comes up in the future, because obviously if it was a larger amount, it would be more of a problem. I'm not saying I'm going to flat out reject the idea of paying the fees either. I'm just not sure what to do, which is why I asked...

Actually, most stores that charge 50 cents for the debit machine WONT refund that. You'll be refunded your total purchase, and not the fee for the machine.

Ive had multiple cases like this IRL when I was over charged or something was purchased but went bad before its date.

It's the same here, some stores will charge extra if you use an ATM card below a certain amount and you do not get that refunded if you return the item, because the shop still had to pay the bank fee for the small transaction.

It's not that unusual.

I've never seen a store that charges for debit or credit before. I don't know if that's something that varies by region or what.

I believe in the US, it's illegal to charge extra for people using credit cards. It is, however, legal to give a 'cash discount' (though I feel like I only see this really used at gas stations). The difference is only in the wording, really.

It definitely depends on which country you live in though.

I don't know if it's illegal, but I think it's more like PayPal where the terms from the payment processor don't allow including the fees in the purchase price. I haven't even seen a gas station with a lower cash price in years now, but I do live in a large, metro area. Maybe it's more common in smaller towns? I remember seeing it now and then when I was a kid, but it's been a long time now.

It's not charging extra for credit cards, it's for using the Interac terminal because you (shop owners) have to pay for it.

It's often small stores, like family owned. Walmart or Target don't, but our local corner stores do. Family owned pizza places, stuff like that. It's usually 50 cents, but can go less/more. This fee is almost never refunded when the purchase is. (I personally have never had it refunded)

"Then again, I've seen bewares posted for art that's cost less than $3"

In which case that is the entirety of the amount in question. If people didn't refund that, they wouldn't have refunded anything.

I understand that. I'm not saying I was getting the worst deal ever or anything like that, and in the end, I got it sent as a gift so no one had to worry about fees, so it wasn't a big deal. I'm not trying to make this out as something awful or anything like that, so I'm sorry if it came across like that. Like I said, I've never dealt with a refund from an artist via PayPal for, so I was really curious what the general expectation would be. Does the expectation change depending on the dollar amount?

Not really, if an artist can't or won't deliver, they're expected to do their best to refund, be it a small or big amount. However, it's not wholly unreasonable to for example, wait a little for the money to be transferred so it can be refunded, have an artist pay it back in terms or take a small hit on transferal fees.

I'm glad you two could work it out via sending the refund as a gift, but I wouldn't recommend it for artists. Someone less scrupulous than you might get a refund sent as a gift and THEN contact Paypal for a refund, even outside the 100 day refund window. Paypal is disturbingly inclined to side with buyers when it comes to commission, and an artist would be out of an extra $56.29.

I understand that you don't want to be shorted on your refund, but the artist is taking a pretty big risk in refunding you this way. And also they're paying the fees THEY paid when they received your money out of their own pocket back to you.

Again, I'm not trying to claim she was being unreasonable.

(screened comment)

Hiya!

This was an advice post, not a beware. These posts remain anonymous as to who the artist/client could be referring to.

You don't owe any explanation in the case of an advice post, so I'm screening your comment to keep you anonymous.

Flat | Top-Level Comments Only

Advice: PayPal Fees on Refunds

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