We waded through the terms and conditions for New Zealand’s online marketplace so you don’t have to. Here’s what we found.
What’s new?
Trade Me’s payment and fee structure, which had a major overhaul in March.
What’s in the big print?
The 7.9% success fee has been scrapped for casual sellers. Trade Me says the goal is “to help you say goodbye to your things and keep more of the profit in your pocket”.
Awesome … but what’s hidden in the fine print?
While one fee is gone, another has been introduced – a “service fee” for buyers who pay via Ping, Trade Me’s built-in payment system, which will be most buyers (more on that later).
You could argue it’s a “success fee” by another name, just shifted from one party to another. We’re guessing it’s harder for Trade Me to attract sellers than buyers, especially with Facebook Marketplace as a competitor, so it makes sense to move the cost away from the former and on to the latter.
Let me guess – the service fee is higher than the old success fee?
So cynical! As a matter of fact, it’s quite a bit lower. The service fee works in tiers: free for purchases under $20; 99 cents for purchases up to $100; $1.99 for purchases up to $250; $4.99 for purchases over $250. If you translate that into percentages, the highest it can possibly get is 4.95%. Trade Me says the average service fee will be about 99 cents.
What’s the catch?
We wouldn’t describe it as a catch, but there is one other significant change: Trade Me has removed bank transfer as an option and made it compulsory for sellers to allow payment via Ping. Apparently, 90% of unresolved scams last year involved bank transfers, and Ping allows Trade Me to verify transactions and intervene more easily if there’s any funny business. While bank transfers were free, Ping comes with a 2.19% transaction fee for sellers.
Aha! So that’s where Trade Me is making its profit!
Not really. We ran a comparison of bank-transfer transactions under the old system (with a success fee for the seller) and Ping transactions under the new system (with a service fee for the buyer). For sales between $20 and $28.13, Trade Me was slightly better off under the new system, but in all other cases, it profited more under the old system.
Why on earth would it make this change, then?
We can think of two reasons. First, Trade Me might believe that scrapping success fees will attract so many more sellers that it will ultimately earn more, despite lower per-listing revenue. Second, if the company was spending a lot of money fielding complaints and trying to detect and prevent fraud, the new Ping-centric system could work out cheaper.
Are you sure this “Ping” thing isn’t dodgy?
We’re pretty sure. If you’re looking for a hidden motive, the most we can say is that Ping will allow Trade Me to gather more detailed, accurate data about user behaviour. With bank transfers, there was a certain amount of guesswork required – Trade Me knew when an auction was won, but it often didn’t know whether the money had actually changed hands. Better data will always be useful for a business … but in terms of your privacy, we don’t see any red flags.
I’m still suspicious. What if I want to opt out of Ping?
If you’re a seller, you can’t opt out completely, but you can provide two other options – Afterpay and cash on pick-up – and hope the buyer chooses one of them. However, Afterpay comes with a 4.95% transaction fee for sellers (no fee for buyers), so it’ll cost you more than Ping.
If you’re a buyer, you’ll find that many listings are now Ping only. The seller might be willing to accept cash on pick-up, but we wouldn’t recommend it – only Ping and Afterpay transactions are covered by Trade Me’s buyer protection guarantee (which, by the way, increased from $2,500 to $5,000 in March).
Can you give me the short version?
We think this calls for a table.
Overall, under the new system, sellers will pay less and buyers who use Ping will pay a little more but get better protection against fraud. In most cases, Trade Me will collect LESS money per sale. We think it’s a good thing for consumers.
You would say that, though – didn’t your CEO used to work for Trade Me?
We’re offended! We did ask Jon what he thought about the change, though. He said, “It looks pretty good. Anything that helps protect traders from scams, even if it costs buyers a little more, is a good thing. Success fees annoyed sellers and sucked the life out of Trade Me Marketplace – that’s been clear for years, so I’m surprised it took Trade Me this long to make these changes.”
Thanks to the support of our Consumer NZ members, we’re able to pore over pages and pages of fine print every day. Become a member and help us advocate for all New Zealanders.
