PayPal’s seller protection scheme to debut in Asia in Oct

By Edwin Yapp September 6, 2013

Payment aggregator launches its seller protection feature to safeguard merchants, boost e-commerce
Claims to be able to protect both buyer and seller at the same time, on the same transaction

PayPal’s seller protection scheme to debut in Asia in Oct PAYPAL is about to launch its seller protection scheme for 13 countries in Asia Pacific, a move which the company claims will protect merchants from fraudulent transactions and from buyers who claim they did not receive their ordered items.

The seller protection policy will become available for merchants come Oct 11, 2013 in Australia, New Zealand, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam, according to the San Jose, California-based online payment aggregator.

The policy however only covers tangible (physical) items shipped and does not cover digital services such as gaming software and other web-based software services.

Speaking to the media yesterday (Sept 5), Lawrence Chan, vice president for merchant services in Asia Pacific, said one of the biggest problems faced by the e-commerce landscape in the region is the distrust between buyers and sellers, a situation that leads to a decline in online transactions here.

Also the general manager of PayPal South-East Asia, Chan noted that in almost any e-commerce transaction today, two major problems plague merchants who are selling their goods online.

“Today in almost any e-commerce transaction, the seller who has shipped an item to a buyer has to bear the cost even when the buyer did not authorise the transaction and can prove that he didn’t do so.

“Secondly, if a seller has already shipped the ordered goods but the buyer disputes this and claims that he didn’t receive the goods, the seller will also end up having to bear the cost,” he explained. “These are two big reasons as to why there is no trust in e-commerce today.”

Chan said that with PayPal’s seller protection policy in place, sellers would be protected as PayPal would bear the cost of the transactions should they face the two aforementioned scenarios.

PayPal’s seller protection scheme to debut in Asia in Oct When asked why PayPal’s seller protection will only available from October, given that the United States and Europe have enjoyed this service for a long time, Chan (pic) said that the payment aggregator needed time to understand the business here in Asia Pacific and collect the relevant transaction data before providing the service.

“We’ve only been in the region for five years and we believe that only now have we reached a critical size that we can understand our business better [and implement seller protection].

“Following our chief executive David Marcus’ call to put our customers first, we’ve also been listening more to our customers, particularly our sellers, and they have spoken very loudly and clearly [advocating] seller protection, while at the same time telling us not to remove buyer protection," he added.

Chan said that upon deciding to implement the policy across PayPal’s major markets in Asia Pacific, the company "needed some time" to put all the building blocks in place to make seller protection available in the region.

He claimed that while many other payment providers try to implement seller protection, it is the only payment player that is able to provide both seller and buyer protection at the same.

“The beauty of what PayPal is able to do is to provide both seller and buyer protection at the same time – that is, both parties are protected in the same transaction for the same goods sold/ received,” he said.

Chan said that for instance, if the buyer can show that he didn’t authorise a transaction but at the same time the seller has already shipped the goods, PayPal will not sacrifice one over another and will cover both the buyer and seller.

"We believe that given the scale we are at, we can provide both seller protection and buyer protection at the same time,” he said.

That said, Chan was quick to add that PayPal is not trying to encourage fraudulent practices through its seller and buyer protection scheme and will not hesitate to take action on those trying to game the system.

“If there are fraudsters who try to cheat us, we will report this to the police. If sellers and buyers are found to be working with each other, we will be able to tell and will not hesitate to take action by terminating our protection for these people,” he said, adding that PayPal has enough confidence in its systems and data to know when to stop providing this protection.

Quizzed as to why PayPal only plans to cover tangible but not intangible (digital) goods, Chan said to apply seller protection on intangible goods would require a deeper understanding of how these services work.

“We think that [seller protection] on digital goods should assessed on a case-by-case basis because the margins for digital goods is small.

“To the best of our knowledge today, we’re not able to come up with one blanket value proposition across the different verticals [in the intangible sector] and we don’t think we have the level of understanding yet to have policies in place for these transactions,” he acknowledged.

Chan did however reveal that PayPal is now exploring seller protection for digital goods and is engaged with some merchants dealing with intangible goods, but declined to elaborate or give a target date as to when merchants would see this feature implemented.

Meanwhile, Chan also revealed that the top five countries Malaysian merchants are selling their goods to are Japan (57%), Singapore (40%), China (35%), United States (19%) and Australia (19%)

He added with the seller protection scheme in place, these figures will grow much more in the near future as confidence in e-commerce is expected to rise.

For more information on PayPal’s seller protection, click here.

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