ZDF takes a closer look at PayPal and Klarna – and finds hidden costs for consumers

PayPal and Klarna are simple methods for paying online. And they’re free. But not for everyone, as a ZDF investigation shows.

Frankfurt – PayPal is the most popular payment service in Germany. According to the ZDF More than 400 million customers use the service and the company generated 30 billion euros in sales worldwide in 2023. The EHI study “Online Payment 2024” found that 27.7 percent of online purchases in Germany were paid with PayPal in 2023. Those who use the service initially pay nothing for it. As the ZDF However, as examined in his consumer program “Wiso”, appearances could be deceptive.

Is PayPal really free? ZDF program reveals

The July 15 broadcast tested what it was like to pay for everything with PayPal for three days. The start-up “Wyldr” explains that as a company they have to pay for the provision of the payment option. “The payment fees are a very important part of our calculations and our costs. “We then of course pay PayPal or another payment service provider for this – per transaction,” says co-founder Jakob Klassen.

The exact conditions for this case are not disclosed. Generally speaking, according to the program, the fees are a fixed 0.39 cents per transaction plus 2.99 percent of the total amount. Between friends, it is actually free. Consumers recently sued PayPal because of other fees.

This is how PayPal passes costs on to customers

But the company obviously doesn’t want to be left with the costs – and so it passes them on to the customers. Jakob Klassen explains: “Because we have to earn a certain amount per order, per delivery, we don’t really have any other choice than to pass that on to the customer, to increase the price.” It works like this: We have two payment methods. A large proportion choose PayPal, the other part chooses credit card. We calculate the average of the costs that this generates and then add that to the price. That’s how we pass it on to the customer in the end.”

A provider is also usually used for credit card payments; for “Wyldr” this is “Stripe”. The co-founder explains that the fees for this are “half as expensive”. “If all customers always chose this cheap payment option, we could also offer a cheaper price in the medium term.” But because everyone chooses PayPal, we have to calculate with a higher rate. The offer is therefore a bit more expensive.” But there is no other option because customers would buy less without the option to pay with PayPal.

PayPal itself says on the subject of fees: “PayPal believes that all consumers should have the option of making a quick and secure payment – ​​without any hurdles or additional costs.”

Klarna explains business model – lawyer contradicts a statement

In addition to PayPal, there is another major player among payment providers: Klarna. According to Finanzfwd.com The company generated sales of around two billion euros in 2023. Offers include purchase on account, instant bank transfer and installment purchase. Nicole Defren, Head of Germany at Klarna, explains how the company makes its money: “The business model is based on merchant fees, which is the largest part of our turnover.” Klarna receives an amount for each transaction and “also covers the risk of default.” This arises because merchants are paid out in advance by Klarna. On the subject of passing the costs on to customers, Defren says: “No, that’s actually not the case.”

Sandra May, a lawyer at the Händlerbund, disagrees: “Klarna and PayPal are among the most popular payment providers, but they are also among the most expensive.” Of course, when online retailers integrate these payment providers, they have to calculate with these fees and add them to the purchase price. Every retailer has negotiated slightly different conditions, but it is the case that payment service providers “retain around one to three percent per transaction, as a kind of commission, and add a fixed flat rate on top.” The conclusion of the program: “One thing is definitely not: free.”

Recently, PayPal also fell victim to a scam. (jh)