BIGGER UMBRELLA
Protection for intangible purchases
PayPal is extending the protections it offers people who pay for purchases through its online platform to now also cover so-called “intangible” goods such as services and digital products.
Starting July 1, worldwide users of the San Jose, Calif.-headquartered company could be eligible for a full refund if, for example, the digital file of a song purchased electronically was never transferred to the buyer, or if it arrived but is significantly different than how it was advertised by the selling party at the time of purchase, the eBay Inc. unit announced Thursday.
The website has insured web orders for physical, or “tangible,” goods this way for years. But as part of a multi-year effort to boost confidence and fend off other competing methods of payment, PayPal has been adding safeguards to ease shoppers’ security concerns.
As sales attributed to digital downloads for things such as music, books and travel tickets continue to soar, this update attempts to narrow what was quickly becoming a widening hole in the company’s purchase protection policy, which is now expected to provide coverage for up to 98 per cent of all PayPal transactions.
After a successful pilot test in the U.K. last year, PayPal will deploy its new program, and the internal processes required to support it, in the markets where it operates around the world.
“We see a meaningful improvement in customer satisfaction in the level of trust attributed to PayPal,” said Tomer Barel, the company’s chief risk officer. “We also see that sellers are benefiting from the fact that buyers feel more comfortable purchasing from them.”
Six million of PayPal’s 165 million active users are from Canada. More than 200,000 Canadian retailers and small business use the service for their business, including Hudson’s Bay, Indigo, Roots, Cineplex and Canada’s Wonderland near Toronto. According to company data, PayPal processes more than 11.5 million transactions per day globally, worth roughly $624 million US.
PayPal declined to comment on the current mix of tangible and intangible goods, but said the latter is “becoming a much more established category” for the technology company that was once dedicated to fulfilling orders of items bought and sold on eBay.
PayPal, which is preparing to spin off from eBay, recently expanded the period that a claim can be filed to 180 days from 45 days. Under this revised protection policy and longer window to file disputes, PayPal will surely be exposed to greater liability, a risk Barel says can be mitigated with wellbuilt I.T. systems.
“The benefit is clear, meaningful and material,” he said, “and the cost for us is worth the investment.”