The downsides to paying with Paypal?
Paypal have been busy sneakily taking over the world. Once just a quicker way to pay for essentials bought on eBay, you can now use Paypal to pay for loads of things, in many different online, and now offline retailers. Physical shops can now use Paypal’s own version of a chip and pin machine to get card payments from customers.
However, there are a couple of things to be aware of when paying with Paypal, as it can affect return policies, or even consumer protection.
A recent case was investigated by the Telegraph where a consumer was having difficulty obtaining a refund of some building materials. He had paid by Barclaycard, with the merchant accepting payment through a Paypal card machine, so was advised he could claim against Barclaycard under Section 75 of the Consumer Credit Act. This allows the consumer to seek redress from the card provider when using a credit card for a transaction worth between £100 and £30,000 where there is breach of contract or misrepresentation.
However, in this case, Barclaycard refused to accept liability, saying: “When payments are made to a company that is not the one providing you with the end goods or services, as is the case with PayPal, there is no claim under Section 75 because the credit card company must have a direct relationship with the supplier for them to be equally liable.” Barcalycard’s argument was that they had supplied Paypal with the cash, not the merchant, and that Paypal had not acted in breach, so there was no way they could be held under s75. Paypal disagreed.
The issue is that, normally when paying for something with Paypal, the funds go into a Paypal account, and Paypal then pays the merchant, and this was Barclaycard’s argument. However, the chip and pin machine did not work in the same way, with a Paypal account, so Barclaycard would have been liable under s75, a fact they later agreed to after taking legal advice, had the customer in this case not obtained a refund in full from the merchant.
But the Paypal mechanism does mean that you need to be aware that some retailers have specific different returns policies if you pay with Paypal, rather than directly with your credit or debit card. Many retailers will allow you to return items bought online to a local store for a full refund. However, if you have paid with Paypal, some stores will only refund your money on a gift card, rather than in cash. You can obtain a cash value refund to your Paypal account, but only if you return items by post. Other stores, such as House of Fraser, will not accept any returns in store if purchased by Paypal, and the Paypal returns window can be halved, down to 14 days rather than the customary 28 days.
All this information should be found on the relevant store’s website returns policy, so if you are thinking of buying something online and paying with Paypal it is worth checking in case you need to make a return.