PayPal User Agreement and Seller Protection

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2 From ebay s Third Quarter 2010 Results Press Release

3 The PayPal User Agreement is 34 pages with 16 sections. The PayPal Website Payments and Virtual Terminal Agreement is 14 pages. Merchants also have to complete the User Agreement rd Party Rankings Customerservicescoreboard.com = Overall rating is 52.79/200 = 26% Issue resolution, Reach-ability, Cancellation, Friendliness, Product Knowledge Viewpoints.com = PayPal Cons: horrible customer service, horrible seller protection The majority of negative feedback is about PayPal arbitrarily withholding merchant s funds without an explanation or dispute resolution procedure. Merchants are at their mercy! See also:

4 11.5 Items/transactions not eligible for Seller protection. The following are examples of items/ transactions not eligible for Seller protection. Claims or Chargebacks for Significantly Not as Described. Items that you deliver in person. Intangible items, digital goods, and services. PayPal Direct Payments, Virtual Terminal Payments, and PayPal Business Payments. Items that are not shipped to the recipient address. If you originally ship the item to the recipient address but the item is later redirected to a different address, you will not be eligible for Seller protection. We therefore recommend not using a shipping service that is arranged by the buyer, so that you will be able to provide valid proof of shipping and delivery. From the PayPal User Agreement, Nov. 1, 2010

5 To take payments on a web site. Website Payments Standard Website Payments Pro Internet merchant account Not needed Included Setup/Monthly Fee Free $0/$30 Per trans fee 2.2% to 2.9%, based on volume; 30 cents per trans VI/MC/DC = 2.2% to 2.9%, AmEx = 3.5%, based on volume; 30 cents per trans Virtual Terminal n/a Included, rates increase: 2.4% to 3.1%, based on volume; 30 cents per trans Recurring n/a $30/month Advanced Fraud Filters n/a $20/month; 5 cents/trans Can merchant use their own merchant account? NO NO

6 PayPal Website Payments Pro and Virtual Terminal Agreement Last Update: Aug 24, b. Required Use of Express Checkout. You must offer PayPal as a payment option together with the other payment options you offer. The PayPal acceptance mark must be displayed with equal prominence to the logos for your other payment options. 2g. Failure to Use Express Checkout. If you fail to comply with the requirement to use Express Checkout described in Section 8, you may be subject to up to a 1% fee increase to your then current Transaction Fee rate. 2h. Risk Factors Fee. If PayPal determines that your PayPal Account receives, or is likely to receive, a disproportionately high number of customer complaints, Reversals, chargebacks, disputes, claims, fees, fines, penalties or other liability (collectively "Risk Factors"), you may be subject to up to a 5% fee increase above your then current Transaction Fee rate. 7. Card Not Present. You acknowledge that PayPal processes transactions through the Products as remote (card not present) payments. If you accept a Card that is physically presented to you at the point of sale you acknowledge that the scope of your protection from Chargebacks will be limited to the protection that is available for remote payments. You agree that you may not accept an American Express Card that is physically presented to you.

7 Required for merchants using their own merchant accounts. 1. PayFlow Link PayPal hosted checkout 2. PayFlow Pro link PayPal SDK into merchant s own cart/web application. Development required. epn Payflow Link Payflow Pro Setup $ $179 $249 Monthly Fee $20 $19.95 $59.95 Per Trans Fee 1 st 250 = free 251+ =.05 1 st 500 = free 501+ =.10 1 st 1000 = free =.10 Recurring Included $14.95 Setup $9.95 Monthly AVS/CVV2 Included $29.95 Setup $19.95 Monthly +.05/Trans $39.95 Setup $29.95 Monthly $29.95 Setup $19.95 Monthly +.05/Trans TOTALS Setup = $ Monthly = $20.00 Setup = $ Monthly = $49.85 Setup = $ Monthly = $ Technical Support Included 3 options 3 options

8 Standard Monday to Friday; 5am to 6pm; Pacific Time Only available to Payflow Link merchants Unlimited and web support $12.00/Month Enhanced 7 days a week; 5am to 6pm; Pacific Time Unlimited and web support alerts on transaction issues Two hours integration support $159/Month Premium 24x7 Unlimited and web support Priority routing of calls alerts on transaction issues Four hours integration support $495/Month PayPal Processors American Express FD-Nashville, South, North Merchant e-solutions Moneris Elavon Paymentech Salem & Tampa PayPal Telecheck TSYS Fred Included

9 Privacy Policy for PayPal Services Last Update: Nov 1, Our use and disclosure of information We may use your personal information to: customize, measure, and improve our services and the content and layout of our website; send you targeted marketing, service update notices, and promotional offers based on your communication preferences; We also use your address to send you other types of communications that you can control, including notice of special third-party promotions. Disclosure to Third Parties other than PayPal Customers TSYS. To conduct joint marketing campaigns for PayPal pre-paid card, risk and fraud modelling, enforce terms and conditions for PayPal prepaid card Satmetrix Systems, Inc, incontact (USA), Decipher Inc. (USA) and Northstar Research Partners (USA). To conduct customer service surveys Salesforce.com. To store merchant contact information. Yesmail Inc. (USA), Responsys (USA) and Silverpop Systems Inc. (USA). To fulfill operations in respect of PayPal services including marketing programs and promotions Our Use and Disclosure of Information

10 They won t even tell merchants why they are holding funds! Payment Holds Policy Though we can't include every reason your account may have been affected here, here are some common reasons: You have limited history or selling activity with ebay and PayPal You have low Detailed Seller Ratings, negative Feedback or other indication of below-standard performance on ebay You have a high rate of customer refunds, disputes, claims or chargebacks You're selling in a high risk category or industry such as, but not limited to, tickets, travel, gift certificates, computers, consumer electronics, or cell phones Your business or selling activity is inconsistent. For example, you have a spike in selling activity, your average selling price changes, or you started selling in a new category without an established history in that category The account information you have provided is incomplete or inaccurate, or we're uncertain with the information you've provided Your withdrawal activity has changed

11 What can merchants do about payment holds? No where do they suggest the merchant contact PayPal to resolve!

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15 Basic Facts: Founded in 2009 by Jack Dorsey, one of the founders of Twitter Works on iphone, ipad, ipod touch, and Android devices Reader is shipped for free No merchant account required, transactions processed under a Square MID Features: Up to 10 phones per Square account Reader is REQUIRED, plugs into headphone jack Manually keyed cards only if mag stripe is damaged Supports Tip & Tax Calculation Electronic signatures SMS (text) receipts Online Reporting Refunds done at squareup.com, not on phone Only accept payment in 50 US states

16 Square User Agreement: As a new Square user, we will immediately deposit your first $1,001 of sales per week to your bank account; any remaining amount will be deposited within 30 days Reserves. For the first six (6) months new Square Accounts will be required to maintain a Reserve of no less than the combination of a trailing 14 days of sales activity and any pending transaction disputes (i.e., Chargeback, refund request or claims). There is a restricted merchant s list Square FAQs: Can I use the Square app to capture my customer s information? Square does not share any customer information (i.e. NO) Why does the Square app need to know my location? In order for the Square app to function, you must allow the app to know your location (i.e. GPS/ Location must be enabled on device)

17 Merchant Account Contract Card Reader Not Required None Free Setup $0 Monthly Fee $0 Monthly Minimum Card Swipe Rate Card Not Present Rate None 2.75% + 15 cents per transaction 3.5% + 15 cents per transaction

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