Alert: PayPal may potentially open an exposure to credit card users without the user's or vendor's knowledge.

I read the following article about MasterCard hitting PayPal with higher charges and Visa likely to follow suit. The reason being is PayPal doesn’t pass on buyer purchase information which the credit card companies want. Obviously there is value in this information for credit card companies and for users that should be a concern. The question becomes how are the credit card companies using this information if it is so important to them. You’d expect the fees they charge would be sufficient.

MasterCard stings PayPal with payment fee hike... Read More

The second and more worrying issue, subject to the article being correct and my reading being correct, is when you pay using credit card on PayPal you aren’t actually doing a direct purchase via the credit card provider. This could mean the protection offered by the credit card supplier might not exist. The following paragraph is a real concern.

“There are advantages to going direct - customers get the free insurance and fraud protection which come with using most credit cards (and don't apply to transactions processed through a third-party wallet), but most will see this as an embedded duopoly using its market power to undermine competitors.”

This paragraph is with respect to Google wallet, but the concern to me now is whether or not a credit card purchase via PayPal offers the same protection as a credit card purchase performed with a vendor with a direct relationship with the credit card provider.

I’ve long considered the protection offered by paying using credit card versus other forms of payment to be one of the benefits of using the credit card. If this benefit is voided by using the credit card through PayPal that would be a real concern.

I’m not certain at this stage if this is a real problem or not. Until I can find out further information I’ll certainly be weary of placing any order more than a few dollars through PayPal using a credit card. Using money in a PayPal account however is not affected.

The bottom line for me is I no longer know if I’m covered by the usual protection offered by my credit card provider if using a credit card on PayPal and to me that is a concern.

- Kelvin Eldridge
www.OnlineConnections.com.au
Call 0415 910 703 for help with your computer problem.
Servicing Templestowe, Doncaster, Eltham and the surrounding area.