Paypal is increasing Masspay fee cap :(

UPDATE 2 (18 Oct 2011): PayPal masspay fee cap updated

UPDATE 1 (12 Oct 2011): Good news! Paypal masspay fee cap not changed yet


Dear Sellers,

We’re sorry to break this news to you.

Effective 11 October 2011, PayPal will be increasing Masspay fees..

  • from 2% to a maximum of USD 1 / EUR 0.85
  • to 2% to a maximum of USD 50 / EUR 40

You can read more about this policy change here.

Please note that:

  1. This policy change will NOT impact > 70% of sellers, and will have minimal impact on >95% of sellers. (More)
  2. The fee cap is not certain to change on 11 October. (More)
  3. First Meta guarantees and will honor 100% of all withdrawals.

I am a Seller. How will this impact me?

If you typically withdraw under USD 50 / EUR 42.50, the Masspay fee will be the same.

  • 78% of FMX withdrawal transactions are less than USD 50
  • 70% are less than EUR 42.50

If you typically withdraw between USD 50 – 2500 / EUR 42.50 – 2000, the fee will be 2%.

  • 96% of your USD withdrawals will have fees under USD 10 per transaction
  • > 99% of your EUR withdrawals will have fees under EUR 10 per transaction

If you typically withdraw more than USD 2500 / EUR 2000, the fee will be capped at USD 50 / EUR 40.

Sellers, so we can better address your cash-out needs, do take a minute to participate in this very short poll.

I am a Buyer. How will this impact me?

This will not impact you directly. You can buy credits as per normal. The price that you see on the ‘Buy’ page is the price that you pay.

When will the new fee cap take effect?

The new policy will take effect Oct 11, 2011. Supposedly.

In some parts of Europe, the policy has been in effect as early as 7 September. However, the fees on European PayPal accounts have not yet been changed till today. Therefore, there is no need to rush to make withdrawals.

There is no way for us to ascertain exactly when PayPal will make the change since they have the right to do so any time after 11 October. Therefore, we will be implementing a masspay fee refund feature:

  • When you withdraw, the masspay fee will be calculated at the new fee cap.
  • For as long as the fee cap remains at $1 after 11 Oct, we will credit the difference back to your FMX account.

E.g. You withdraw $204 from your FMX balance.
Masspay fee is expected to be $4.
FM will send you $200 via masspay.
If masspay fee is $1 instead of $4, we will credit $3 back to your FMX account.

E.g. You withdraw $5000 from your FMX balance.
Masspay fee is expected to be $50.
FM will send you $4950 via masspay.
If masspay fee is $1 instead of $50, we will credit $49 back to your FMX account.

Masspay fee refunds (if any) will be processed once a day for transactions in the previous day. We will follow up with another announcement when the new fee cap is actually live.

I am using other resellers / exchanges. Why are they not affected by this policy?

PayPal rolls out their policies to different countries at different times. At this point, the policy has been announced for pretty much all of Asia and Europe, and from our sources, we believe it will be announced for US soon. (You can read the PayPal legal agreements for the various countries here.)

Again, in some European countries, the policy has been effective since 7 September, but the fee has not actually been changed.

Rather than spring a surprise on our users when the fee actually changes, we prefer to address it in advance so you guys have time to make the necessary arrangements you need.

What is First Meta doing about it?

We try as far as possible to keep our fees low and to make our service as affordable to everyone as possible. We have looked and will continue to look into ways to reduce the cash-out fees for sellers.

We investigated incorporating a US company and PayPal account.
After numerous conversations with PayPal, tax attorneys and accountants in the US, we have determined that it is not a feasible option in the near future.

Taxation in the US (>45% for foreign companies) is significantly higher than in Singapore, where we enjoy a very low tax rate. Incorporating in the US also introduces additional costs and operational complexities that could significantly drive up the company’s operating cost, which would then make it difficult for us to keep our fees competitive for you.

Moreover, it is likely that the policy change, even though not yet announced, would also be implemented for US PayPal accounts in the near future, which would then make it even more expensive for sellers.

Thus, we believe that maintaining our PayPal account in Singapore, despite the increase in the Masspay fee cap, would provide the biggest overall benefit to our community.

We are evaluating alternatives to PayPal Masspay and getting sellers feedback on cash-out methods.
We have initiated discussions with several alternative e-wallet services including Moneybookers and Alertpay. We are trying as fast as we can to complete careful evaluation of the services.

Sellers, to help us make a better decision and thus better serve your needs, please do take a minute to fill up this poll.

We are implementing a Masspay fee refund feature.
As mentioned above, we do not want to overcharge, and thus the new Masspay fee refund feature will refund any differences in fees.

We are pre-funding our PayPal account with a higher than usual amount of funds.
As a company, it is not wise for us to keep all our funds in PayPal. We spread our funds out over several accounts, including PayPal, bank accounts etc. to minimize risk. To cope with withdrawals during this period, we have added a higher than usual amount of funds into our PayPal account.

In the rare event that the PayPal account is overdrawn and you do not receive your funds instantly, please do forgive us, and do not panic. First Meta has many times more than all of FMX balances in liquid funds. We guarantee and will honor all withdrawals, even if the transaction might not be processed immediately.

I withdraw large amounts and this will impact me greatly. How can you help me?

We are working directly with our sellers who withdraw large amounts to try and help them reduce the impact of this change, by offering concessions and alternatives that may be more economical at large volumes.

If you fall into this category, please contact us directly at We would also really appreciate if you could give us your feedback by answering this short survey.

Some final thoughts..

We realize that making this announcement ahead of the fee change actually taking effect may result in a frenzy of withdrawals. i.e. we may be shooting ourselves in the foot.

However, we believe it’s the right thing to do.

I’d like to seek everyone’s cooperation to not panic. We’ve taken every precaution we can and we will honor all withdrawals.

Back in 2007 when there were massive bank runs in Second Life, and subsequently resulted in Linden Lab shutting down the “banks”, First Meta was the only one that did not even experience an abnormal level of withdrawals. We honored every single transaction, and became the only bank that was officially allowed to continue operations.

Lastly, I’d just like to express my heartfelt gratitude to some of our largest sellers partners who have been extremely supportive and understanding.

We will be updating on this issue here on our blog so do check back. Or if you have any questions about the policy, feel free to email us at

CEO, First Meta