How the PayPal Merchant Policies Update Could Affect Your Business

This article discusses PayPal's September 28, 2020 merchant-policy announcement, whose U.S. dispute-fee change took effect November 9, 2020. It is historical context, not a newly announced policy. For a current case, use the fee and product terms that apply to your account and market.

According to a PayPal newsroom statement, the PayPal merchant policy update is replacing chargeback fees with a dispute fee for transactions processed either through a buyer’s PayPal account or through a PayPal guest checkout. The 2020 announcement said that for merchants who proactively resolve disputes with consumers, the typical fee on eligible incidents will drop from approximately $20 to $15*.

The 2020 announcement concerned that year's holiday period. Today, compare the actual payment product, case type and any applicable fee waiver before deciding how to resolve a dispute; a historic quoted fee is not a current universal charge.

What the 2020 announcement said about dispute fees

Says PayPal in the newsroom article, “For merchants who have historically relied on PayPal to solve disputes and not engaged directly with their consumers to resolve disputes, there may be an increase in fees. Most merchants, and especially those who already take proactive actions with consumers to resolve disputes, will see a meaningful decline in the fees they are charged."

By this, it seems PayPal is working to spur merchants to work out their PayPal disputes directly with clients. Hence, reducing the number of disputes that PayPal will have to mediate. And looking at the projected increase in the volume of e-commerce transactions and eventual rise in friendly fraud, this is a smart move on PayPal’s side.

For current U.S. cases, PayPal's dispute-fee guidance distinguishes branded PayPal transactions from Pro/Advanced card processing and describes Standard Dispute Fee waivers, including qualifying inquiries or amicably resolved cases. Merely contacting a buyer does not establish a waiver; verify the actual outcome and applicable terms.

Current dispute decisions require the applicable case evidence

PayPal disputes and issuer-run chargebacks have different decision makers and eligibility rules. Assess the allegation and records rather than assuming the provider automatically favors one side. Our guide on how to win PayPal chargebacks covers the evidence each case type needs.

In the newsroom article, PayPal says the PayPal merchant policies update is part of their fiducial responsibility to maintain trust among their stakeholders. “It is our foundation – allowing consumers to feel more confident that a merchant will honor the transaction, and where merchants can serve a greater cross-section of consumers. This helps both sides of the transaction know that PayPal’s global expertise protects them,” it reads.

The PayPal U.S. merchant fee schedule was updated October 1, 2026 and is the current source for applicable published fees. Your payment product, market, currency, case classification and agreement determine the charge; do not substitute the 2020 newsroom examples for that schedule.

In closing the newsroom article, PayPal says, “the dispute fee changes take effect November 9th, 2020 in the US (date varies by market), and will benefit merchants by encouraging the adoption of best practices to build consumer trust and ensure an amazing 2020 holiday.”

What can you do with this knowledge?

Keep a record of customer contact, refunds, the case outcome and any fee assessed. If the buyer does not reply, follow the case deadline and available action; automation does not bypass PayPal's fee, evidence or eligibility rules.

Check the current automation service, integration coverage and pricing against your case workflow. Forecasts are estimates and do not establish what you will recover. To review Chargeflow's available options, sign up here.