Advice: PayPal Fees on Refunds

[zzyzx.livejournal.com]

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.

Comments

[kattotang.livejournal.com]

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.

[celestinaketzia.livejournal.com]

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.

[kattotang.livejournal.com]

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.

[celestinaketzia.livejournal.com]

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.

[kattotang.livejournal.com]

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.

[shagpoke.livejournal.com]

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. :)

[zzyzx.livejournal.com]

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...

[kattotang.livejournal.com]

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.

[zzyzx.livejournal.com]

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.

[kattotang.livejournal.com]

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.

[zzyzx.livejournal.com]

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.

[kattotang.livejournal.com]

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.

[zzyzx.livejournal.com]

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.

[kattotang.livejournal.com]

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.