PayPal Seller Protection explained

Reginald Ofori
5 minutes

With over 400 million active users, many online orders tend to be paid using PayPal. Given the sheer volume of transactions, it’s a given that fraud and abusive practices from shoppers will occur.

In an [link to blogpost ‘A common misconception about PayPal’] earlier blog post, I explained how PayPal is very much a pro-consumer platform. This means that when a customer lodges a dispute with PayPal about an order, for the merchant it’s very much a case of guilty until proven innocent. 

Surprise, surprise, over the years, this has significantly aggravated merchants, even resulting in various legal proceedings. In response to this, PayPal introduced what they call PayPal Seller Protection. But what is this and how do merchants benefit from this programme?

1. The benefits of PayPal Seller Protection

Perhaps one of your customers claims that:

  1. Their transaction was an unauthorised payment, or
  2. They never received the item(s) they purchased from the merchant.

In both cases, PayPal Seller Protection can help you get the full amount of an eligible payment, subject to a claim, chargeback or reversal, and waive the chargeback fee, if applicable. As long as the transaction meets the requirements of Seller Protection, you as the merchant are protected.

If the above sounds strange to you, you're not alone. It almost feels like this is the default way PayPal should be treating merchants, but again, that is not the case. Now imagine how life could be without Seller Protection.

As long as the transaction meets the requirements of Seller Protection, you as the merchant are protected

2. The requirements for Seller Protection

It’s important to understand that Seller Protection is not provided on an account level. Instead, every single order is evaluated to see if it’s eligible for Seller Protection.

In order for an order to qualify for Seller Protection, it needs to adhere to these three terms and conditions set by PayPal: 

  1. Seller Protection covers both physical items sold (clothing, food, furniture, etc.) as well as intangible items (this includes services but also things like etickets, etc.).
  2. The transaction needs to be paid for in a single installment.
  3. In the case of physical goods sold, the item(s) need to be shipped to the same shipping address registered during the transaction.

Now, if a transaction is eligible for Seller Protection, the merchant needs to take the next steps to actually enable it: 

  • When selling physical/tangible goods:
  • Upload the order tracking information for each order. You can either do this manually (which is very time-consuming and prone to errors) or use a service like Solpaid to do this automagically.
  • Keep the proof of shipment and proof of delivery.

When selling intangible goods you need to provide proof of delivery or use of the object bought by the customer or, as the case may be, proof that the service provided was properly implemented.

Now, here is an important fact that you will not read about anywhere, not even on the PayPal website. As someone who has had enough run-ins with PayPal, I know this for a fact: when PayPal reaches out requesting for proof of shipment or delivery, make sure that you do two things:

  1. Take a screenshot of the order tracking page and share that, and make sure that the shipping address is clearly stated. Not doing so is a sure way PayPal can decide to raise a dispute in favour of the buyer.
  2. If your warehouse, 3PL or fulfillment software allows you to download the shipping label for the order, make sure you share that PDF too.
  3. Certain 3PL offer the premium option of photographing the contents of every shipping box before sending it out. Assuming the per order fee is affordable, I would advise opting for this feature as it goes a long way in proving that you shipped the right items to the customer. 

In the end, PayPal is looking for hard proof that you, as the merchant, shipped the items to the customer, and that you shipped it to the right delivery address. Without this, disputes will often be settled in favour of the buyer.

Screenshot of a shipment tracking page from Spanish carrier Correos (the Spanish equivalent of USPS or Royal Mail). A portion of the shipment tracking number has been blacked out for privacy reasons.

3. Overview of exemptions from the Seller Protection programme

The PayPal Seller Protection programme does not cover the following instances:

  • Items not authorised by the Acceptable Use Policy or prohibited by law.
  • Licences for digital content and digital goods.
  • Claims, chargebacks and reversals for significantly not as described.
  • Items that you deliver (or are picked up) in person.
  • Transactions made through Zong, PayPal Integral Evolution (where the items purchased are intangible items, licences for digital content and/or services) or Virtual Terminal (if available).
  • Items equivalent to cash (including, without limitation, stored value items such as gift cards and prepaid cards).
  • Payments made in respect of financial products and investments.
  • Donations.
  • Items bought via classified listings.
  • Payments made in respect of gold (whether in physical form or in exchange-traded form).
  • PayPal mass payment transactions.
  • Disputes filed directly with PayPal in the Resolution Centre.

As explained above, a prerequisite to be eligible for Seller Protection is to always upload the order tracking information for every order. With Solpaid, this is easy to do and is completely accurate. Simply connect your store and PayPal account to Solpaid, and the order tracking info is automatically synced to every single order as soon as the info is available in your store.

Don’t miss out on the tangible benefits of PayPal Seller Protection; sign up for Solpaid today here

Source: PayPal - protecting our buyers and Seller Protection for Merchants.

Reginald Ofori