BigCartel Added a Tax Feature and Now I'm Paying 10% More in PayPal Fees

Fallu
Contributor
Contributor

Would someone properly explain why the PayPal fee has suddenly exploded after BigCartel added their Tax Feature?
This is for a small business account.


Before BigCartel implemented a Tax Feature, every national charge was getting fined the standard Paypal Fee: 2.9% + $.30.

Before the Tax Feature: 
$35.00 > Product
$5.00 > Shipping
$40.00 > Total
= $1.46 Paypal Fee, which is the expected 2.9% + $.30 of the total price.

OK
Here's what that same product is fined after BigCartel applies tax to the total:
$35.00 > Product
$5.00 > Shipping
$2.90 > Tax
$42.90 > Total
= $4.44 Paypal Fee. 
This fee is greater than 10% of the total cost of the transaction, which I can't find an explanation for anywhere.  If it were going by 2.9% + $.30, the fee should have been no greater than $1.55 for a $42.90 transaction, a $2.89 difference.

The same thing happened for a transaction that totaled $43.30 ($3.30 in tax) -> Paypal charged $4.86 in fees, which is greater than 11% of the transaction total.  The fee should have been no greater than $1.57; that's a $3.29 difference! 

Mind you, both of these transactions are for the same exact product as the first one mentioned (not international).

I was expecting the 2.9% + $.30 to be taken from the transaction total, but 10%-11% demands an explanation.

What's going on? 

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

@Fallu 

 

Obviously the sales tax is the factor here with the buyer paying $42.90, the sales tax is deducted along with the PayPal fee from the amount you receive because $1.54 (2.9% + 30 cents) + $2.90 (Sales Tax) = $4.44

 

$43.30: PayPal fee is $1.56 + $3.30 sales tax = $4.86

 

The $2.90 then is given to Big Cartel to remit to the state. In your PayPal data report it will be referenced as Partner Tax Collected or similar.


Kudos & Solved are greatly appreciated. 🙂

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sharpiemarker
Esteemed Advisor
Esteemed Advisor

@Fallu 

 

Obviously the sales tax is the factor here with the buyer paying $42.90, the sales tax is deducted along with the PayPal fee from the amount you receive because $1.54 (2.9% + 30 cents) + $2.90 (Sales Tax) = $4.44

 

$43.30: PayPal fee is $1.56 + $3.30 sales tax = $4.86

 

The $2.90 then is given to Big Cartel to remit to the state. In your PayPal data report it will be referenced as Partner Tax Collected or similar.


Kudos & Solved are greatly appreciated. 🙂
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