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Way OT: PayPal & credit card

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  • Way OT: PayPal & credit card

    Just a "heads up" in case this applies to you.

    I have my PayPal account set up to use my credit card - the alternative is a link to my checking account, which I consider a really bad idea (I can dispute a credit card charge, but not a bank transfer).

    Now then: I just received notice that my credit card issuer (Chase) will be treating PayPal transactions as cash advances, with the accompanying fees. Which are considerable: 5% of the amount or $10, whichever is greater. And 25% APR on the balance.

    Not that Chase came right out & said so - down 100's of lines in an email there was this:
    "Cash-like transactions will be treated as cash advances." ... a cash-like transaction includes (4th item in list): "making a payment using a third party service including bill payment transactions not made directly with the merchant or their service provider." Further obscuring this little gotcha is that they don't say what the fees are - I had to email them requesting it.

    Bottom line, for example, is that any eBay purchase will have a $10 Chase fee added!

    But it appears as though many/most/almost all(?) eBay purchases can be made with a credit card directly. Time to cancel PayPal!
    Last edited by Bob Engelhardt; 01-31-2021, 09:44 AM.

  • #2
    They seldom miss a chance to add a fee, or charge outlandish interest. It isn't just Chase. What used to be cash withdrawals now become "cash like" transactions. You've pointed out what a wide net that new definition casts. Consider the 25% rate on cash like transactions, then have a look at what their inter bank borrowing costs are. Using the 0.23% interbank borrowing rate (libor), you can see a gross margin that hovers in the 99% range. Of course all card management costs come from that including their bad debt losses. The profit remains staggeringly high and increasing. Think of how commerce has changed in 15 or 20 years. How much GDP is now based on card transactions. You know, the cards with the ever changing terms, definitions, and increasing fee structures.

    Oh, by the way, all the new on-line gambling is no doubt a "cash like" transaction. They saw this honey pot coming a few years ago. Those apps allow you to link your gambling account to your bank account, or fund it via...wait for it...your credit card!!

    "What's in your wallet"?
    S E Michigan

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    • #3
      I have my paypal and other such accounts connected to a seperate bank account and transfer funds to it when I make a purchase

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      • #4
        Another sneaky thing that banks do is to have a "dual purpose" card.... BOTH a debit AND credit card, in one.

        And then the merchant will run it as a debit, never asking, never needing a PIN, no notice that it is not a CC transaction. So of course you LOSE all the CC protections.

        "So convenient" (but not for you, just for the merchants)
        CNC machines only go through the motions

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        • #5
          So is that what the latest upcoming changes to the user / legal agreement is about?? I received an email from them but haven't read it yet.

          I'm going to have to guess that this is because paypal and ebay have forced so many returns / charge backs on credit card companies that they normally wouldn't honor that they have had enough.

          JL.............

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          • #6
            Originally posted by OaklandGB View Post
            [snip]

            Oh, by the way, all the new on-line gambling is no doubt a "cash like" transaction. ...
            Oh, yes -
            quote
            ...include, but are not limited to
            -purchasing travelers checks, foreign currency, money orders, wire transfers, cryptocurrency, other similar digital or virtual currency and other similar transactions
            -purchasing lottery tickets, casino gaming chips, race track wagers, and similar offline and online betting transactions;
            -person-to-person money transfers and account-funding transactions that transfer currency; and

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            • #7
              If Chase really is doing what you suggest they are going to have problems... Amazon is mostly third party merchants for which they act as a clearing hour (like Paypal). My CC (Amex) fine print does not show such fees.

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              • #8
                Originally posted by lakeside53 View Post
                [snip]
                Amazon is mostly third party merchants for which they act as a clearing hour (like Paypal). ...
                Good point. I wonder if Chase makes a distinction between PayPal & Amazon. Maybe the Chase clause "...not made directly with the merchant or their service provider." means that Amazon is a "service provider" & excepted from the cash-like category. But maybe PayPal is also. I'm gonna' write Chase.

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                • #9
                  Get one of those pre-paid credit cards from the check out lane at the market or mart. They deduct $1 a month to use the card. Free direct deposit onto the card. $3.50 to deposit up to $500. Link it to Pay Pal and keep about $20 on it. Put only what you need in for a purchase. Also it is a way to pay bills with cash that will not accept cash.

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                  • #10
                    Maybe it would be more sensible for people to use PayPal's dispute resolutionn procedure before using their credit card company's cancellation procedure when there were problems? Then both PayPal and the credit card company wouldn't be left eating a sh1t sandwich...
                    Location- Rugby, Warwickshire. UK

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                    • #11
                      Originally posted by OaklandGB View Post

                      "What's in your wallet"?
                      Right now? Not much more than moth balls 'n dust.......

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                      • #12
                        Originally posted by Bob Engelhardt View Post
                        Just a "heads up" in case this applies to you.
                        Thanks for the heads up, I would not have known until it was difficult.

                        JR

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                        • #13
                          On the same Chase disclosure notice was a clause that says Chase will now be charging a late fee for missed payments AND permanently boosting the interest rate to as high as 29%.

                          I'll probably cancel that card and fall back to one of my other accounts.

                          Dan
                          At the end of the project, there is a profound difference between spare parts and left over parts.

                          Location: SF East Bay.

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                          • #14
                            That's particularly nice now that it is taking 2 to 4 weeks for letters to get delivered..... you can send the payment the day the bill arrives, and still it may arrive to the CC co late.
                            CNC machines only go through the motions

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                            • #15
                              Originally posted by J Tiers View Post
                              That's particularly nice now that it is taking 2 to 4 weeks for letters to get delivered..... you can send the payment the day the bill arrives, and still it may arrive to the CC co late.
                              My credit card company has an automated system where you can call and issue a check to them without ever talking to anyone. That let us avoid a late fee when the bill arrived 2 days before the due date. You may want to check out that possibility with your card company.

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