Paypal Fixed Transaction Fee Hack

I just thought of a way that you can oh so very slightly screw paypal out of its 30 cents fixed transaction fee, though it requires large sums of money and a trusted receiver.

It's because the fee refund policy at paypal has been simplified so that it's broken in certain extreme cases. Paypal returns a percentage of fees based on a percentage of a refund, and this doesn't take into account the flat transaction fee.

  1. Presuming a payment of $100 needs to be sent, the proper fees would be $3.20, $2.90 is the 2.9% and $.30 is the fixed.
  2. Have a payment of $10,000 sent. Fees are: $290.30 (2.9% + .30)
  3. Have receiver (who obviously must be trusted) refund $9,900. This is 99% of the original purchase, so 99% of fees are refunded, as explained by paypal: (local copy below)

  4. The refunded fees are $287.39 or $287.40, depending on how paypal rounds. The final paid fees are $2.90 or $2.91. You've reduced the fixed transaction fee from 30 cents to either 1 cent or nothing!

Paypal's fee refund policy:

How is my fee refund calculated?

If you issue a full refund, PayPal will refund all the fees.

If you issue a partial payment refund, the fee refund will be calculated at the same percentage as the payment refund. For example:

  1. Your customer buys $100.00 USD of merchandise from you. The fees for this transaction total $3.20 USD ($2.90 USD of this is variable, $0.30 USD is the fixed transaction fee, which is not refunded for partial payment refunds).

  2. You issue a partial refund on the transaction for $40.00 USD (40% of the original amount).

  3. PayPal issues a refund of 40% of the total fees, which in this case would be $1.16 USD (40% of the variable portion of the fee).