December 14, 2012—Sellers beware. Too many refunds could put you in jeopardy of losing your status with PayPal. The online payment service PayPal has announced they are launching a new feature that will monitor seller’s performance metrics. The purpose of the new feature is to warn sellers of potential problems by keeping tabs on seller performance. The new rating scale will include three metrics—Dispute rate; Refund rate; and Average refund time. It will also display “Average Transaction price” and “Average monthly volume.”

Although the new feature isn’t available yet, a spokesperson for PayPal confirmed it’s currently in beta testing with a select number of PayPal users. According to Paypal’s website, the new Performance Benchmarks are designed to “help you improve your business practices and understand our expectations of your business. We track key metrics, help you analyze the information, and let you know if we see room from improvement. You’ll have the information you need to make your business a success. We’ll help you track things like:

  • What percentage of your payments are disputed;
  • How many refunds you issue;
  • How quickly you issue refunds.”

PayPal wants sellers to compare their metrics to “industry benchmarks and get an idea of how satisfied your customers are.” PayPal’s president wants the company to be better at how it conducts its payments holds.

The head of the Risk Design team at PayPal, Russell Bauder, mentioned in his personal blog, “We must keep good tabs on seller performance, or else risk going out of business ourselves.” Bauder also goes on to say in his blog post, “We take action on sellers that demonstrate poor performance. If you get too many chargebacks, we might start holding some of your funds in reserve. People obviously hate this practice, and we get bad press for it, but it is necessary to cover losses.  Our President has said we need to get better at how we do this, and I wholeheartedly agree.”

How do you feel about PayPal keeping tabs on your business and you as a seller?