TL;DR
This is a story of how Paypal abused my trust and opportunistically siphoned off INR 1200 from my credit card for a service (currency conversion) that I didn't ask for and on a transaction that was swiftly reversed by the merchant who understood my concern quicker than Paypal. Even after the refund, Paypal shamelessly kept the cut on the original transaction, and refunded the rest.Worse - their support didn't see anything unethical in keeping their cut in the transaction, even when a customer says he is getting charged for unwanted services, and goes to the extent of getting the merchant to refund the transaction altogether. They outright refused to acknowledge that there is any problem in this practice, and kept throwing the user-agreement at me.
Premise
About a month back, I had activated a trial subscription with an overseas service. The nominal/test charge on the credit card was around 1 USD. While the service doesn't matter, the charge currency does. It was charged in USDs. When I tried a direct charge on my credit card, my issueing bank's fraud blocker kicked in and declined an overseas transaction in USD. I didn't have much time to follow up, so I thought of using alternate payment gateway that was available - which turned out to be Paypal.Initially, on login, Paypal showed me conversion charges for converting from USD to INR. I have a much better setup with my issueing bank that offers me pretty good exchange rate on most of the currencies - USD included. I didn't need Paypal's conversion rate. So I checked carefully, and was able to ensure my credit card gets charged in USD. Thereby avoiding Paypal's conversion fee. I didn't care to find how much it was, since I wasn't going to need it.
Since the payment went through, I decided to save my credit card with Paypal (I may have already saved it before payment back then). Afterall Paypal was a well-known entity in the finance world; and I didn't feel much of a problem in trusting it with my credit-card and letting it charge it. Big mistake!
What Happened
Once the trial period came to close, I decided to continue the service for an year - year because I was getting a good discount on the annual plan, and I felt I would use it for an year. The charge would be around $300 and I let it flow through Paypal, expecting Paypal to do the right thing - charge my credit card in USD.It indeed did the "right" thing - right for itself. Paypal charged it in INR, and added a ridiculous 5% markup as conversion fee! A fucking 5% markup as conversion fee - on a credit card, which is capable of handling a cross currency charge at a 10th of that! If it had charged a bank account and then added a conversion charge, I would have understood. But it charged a credit card. There are quite a few things to note here -
- Credit cards are always enabled/used for international transactions.
- In most cases, they are setup with a much better exchange rate than a 5% markup.
- No attempt was made to charge the CC in USD. If that attempt had failed, charge in INR would have made sense as a fallback.
- An earlier charge of USD 1 - had succeeded on the same card, when it was charged in USD.
- I wasn't even asked if I want to get charged in INR; it just did the "right" thing that would earn it the highest cut at the expense of the customer.
The Support Saga
I immediately wrote to their support about this, clearly stating all the points mentioned above, and asking them to do the right thing. I got their user-agreement thrown at me - particularly the conversion fee section. The support also mentioned if I want to cancel the transaction, I should ask the merchant for refund.I was pissed off, but I wrote to the merchant support right away explaining the whole situation, and asking for a refund, so that I can try an alternate payment gateway that charges my credit card directly in USD. The merchant, to their credit, initiated a refund in a day, no questions asked!
Now comes the rudest of shocks! Paypal refunded the amount, but in USD, thereby shamelessly keeping the initial cut it received under the excuse of "conversion fee". It cleanly siphoned off INR 1200 from my credit card for a service that I didn't ask for, on a transaction that was refunded/reverted by the merchant in full within a day!
In utter disbelief, I wrote to their customer-support again, asking if ethics and customers find any place in Paypal's core values as a business. And to my utter dismay, I kept getting the same user-agreement thrown at me. In short, no matter right or wrong, ethical or unethical, they were not going to part with the pretty penny they made by abusing the trust I placed in them by giving them authority to charge my credit card, and thereby making a fool out of me.
Closing Words
This whole thing reminds me of my last ebay experience where a seller sold me a defective laptop charger on ebay, and ebay turned a blind eye, making a mockery of the ebay-guarantee that made me put my trust in their services. Here's the blog-post regarding that experience in detail - A Fraud Called Ebay Guarantee. I never dealt with ebay ever again after that. As of now, in a booming e-commerce market like India, ebay is nowhere to be seen. That's what happens when you are penny-wise pound-foolish and place your priorities at odds with customers.Having been used to Amazon level of customer-care, I can't believe there can be businesses that have such absolute apathy towards customers and run on opportunistic business practices. I don't see how they can survive innovative disruptions when they can't even command customer satisfaction, forget loyalty.
I have removed all my cards from Paypal. There is no question of using Paypal anymore for any transaction even if there is no alternative. I definitely don't see any place for such businesses in a competitive environment of financial services. I hope the likes of Stripe and Adyen are much better and customer-centered in this regard.
