CDR-API-Stream
commented
1 year ago Thanks @PayPalAustralia, is there a reason that the fixed fee cannot be described within the BankingProductFee structure?
Open PayPalAustralia opened 1 year ago
CDR-API-Stream
commented
1 year ago Thanks @PayPalAustralia, is there a reason that the fixed fee cannot be described within the BankingProductFee structure?
PayPalAustralia
commented
1 year ago Thanks @[CDR-API-Stream], here is the reply for "is there a reason that the fixed fee cannot be described within the
BankingProductFeestructure?"
Even though the fee is described within the BankingProductFee structure, having this included in repaymentType aptly explains PayPal’s way of handling loan repayments from customers. The reason being, PayPal Working Capital charges a one-time fixed fee along with the original loan amount, which is paid as part of the repayment cycle and not as an individual fee transaction. This is a little different from traditional banking loan products, and is not accurately represented by the currently available repaymentTypes defined within the standards hence we recommend this addition.
nils-work
commented
1 year ago Hi @PayPalAustralia The DSB is proposing this issue be addressed as part of Decision Proposal 306. Any feedback would be welcome.
anzbankau
commented
11 months ago Hi @PayPalAustralia,
Regarding:
PPWC provides eligible borrowers (Borrowers) with funds directly into their PayPal accounts. The Borrowers are charged a single fixed fee and the working capital is repaid with a percentage of the Borrower’s PayPal sales through their PayPal account. There is a minimum repayment requirement, but no late fees or penalties if a Borrower makes additional payments or early repayment.
And from your comment:
Even though the fee is described within the BankingProductFee structure, having this included in repaymentType aptly explains PayPal’s way of handling loan repayments from customers. The reason being, PayPal Working Capital charges a one-time fixed fee along with the original loan amount, which is paid as part of the repayment cycle and not as an individual fee transaction.
And with reference to the Paypal Working Capital website:
For periods when you don’t have sales, you won’t make any repayments. However, regardless of sales volume, you’re required to meet a minimum level of repayments every 90 days. The exact repayment amount will depend on your business and the options you select.
For periods when you don’t have sales, you won’t make any repayments. However, regardless of sales volume, you’re required to meet a minimum level of repayments every 90 days. The exact repayment amount will depend on your business and the options you select.
From the website (How does it work? > How much does it cost?), the factors that determine the fee amount (i.e., 'repayment percentage you select', 'amount of your loan' and 'your business’s PayPal sales and account history') suggest that it's a combination of an interest payment in advance and a risk premium. The website uses the term 'cost of loan': 'How cost of loan is billed: One fixed fee'. If the repayment component is applied to the loan principal then a repaymentType enumeration of 'PRINCIPAL' makes sense. However, the inclusion of a repayment within a payment labelled as a 'fee' provides information from a different domain. And it may not provide value to a data recipient, when the 'fee' is already defined in the Get Product Detail response as a BankingProductFee.
Even an enumeration of PRINCIPAL_AND_SALES_MARGIN would combine two concepts; the target of the repayment and the source of funds for the repayment. Again, this would suggest a new property, but the value to data recipients would need to be gauged.
Just a couple of questions to help understand the nature of the repayment component of the fee:
PRINCIPAL_(AND_FEE) suggests that it's a repayment against the principal. Presumably there's separation of principal and interest on the business loan for accounting purposes - even if they're not the presented to the customer..feeType of EVENT. Does this, and the website's 'you pay just one fixed fee, which we disclose upfront' (as opposed to bill or charge up-front), confirm that it's not truly an UP_FRONT fee type?anzbankau
commented
11 months ago @Nils,
Regarding the proposal for this in Group 1 in Decision Proposal 306:
#531 Define new Loan Repayment Type to relevant schemas Proposes a new loan repaymentType reflecting a negotiated or accepted fee or rental cost, rather than a fixed or variable interest rate. Proposal: To add a FIXED_COST enum to lendingRateType in BankingProductLendingRateV2 in PRD, which would allow the ‘rate’ field to be conditional. This value would then correspond to a new fixedCost UType in the account loan object.
Proposed schema in DP 306:
"lendingRates": [{
"lendingRateType": "... / VARIABLE / FIXED / ... / FIXED_COST / BALANCE_TRANSFER; mandatory",
"rate": "string; conditional: Mandatory unless the lendingRateType 'FIXED_COST' is supplied",The description 'negotiated or accepted fee or rental cost, rather than a fixed or variable interest rate' seems to recognise that this information is from a separate domain. The repayment of the business loan is a component of the up-front 'fee' (excluding the risk premium), but a single payment does not appear to be a 'rate' - particularly when the rate is not visible to the customer (from what we can see). It seems to be a payment towards the principal, in which case it would be a repaymentType of PRINCIPAL as originally proposed by PayPal Australia and supported in our previous comment.
As in our previous comment, while it's clearly product and account information, it's currently provided as a fee in the Get Product Detail response:
PayPal Working Capital Fixed Fee - $0.00
Fee Type - Event
Don’t worry about periodic interest or hidden fees—you pay just one affordable fixed fee you know when you apply
PayPal Working Capital is a business loan offered by WebBank, member FDIC, for qualified business applicants
who maintain qualified PayPal accounts through which Business PayPal Sales Proceeds are processed through PayPal
[More info](https://www.paypal.com/workingcapital/terms)We'll cover this in our feedback on DP 306, but including in the original thread aids readability.
nils-work
commented
10 months ago Hi @anzbankau, @PayPalAustralia
Just providing my understanding of the product, to hopefully assist with consultation. Values are for illustration purposes only. e.g.
There is no upfront or separate fee charged, as I think was clarified by @PayPalAustralia in this comment:
PayPal Working Capital charges a one-time fixed fee along with the original loan amount, which is paid as part of the repayment cycle and not as an individual fee transaction.
and on the web page -
You repay the loan and fee with a percentage of your PayPal sales.
I believe the intent of this change was to avoid the cost of this loan being called a 'rate' as it doesn't accumulate if repayments are not made (the percentage of sales value is not taken) when sales are not made. Per the original post:
does not accurately represent the character profile of the PPWC product
The cost is not an UPFRONT or EVENT fee, as I believe it is paid off over the variable period of time. It is also not a TRANSACTION fee in the sense currently specified in the Banking Standards.
In this context, I think the PRINCIPAL_(AND_FEE) enum may have made sense, but for DP306 the name was adjusted to the more generic FIXED_COST to allow the convention to be used more generally in any similar scenarios.
I believe the PRD may currently specify a 0.00 EVENT fee (...pay just one affordable fixed fee you know when you apply) only to convey that there is a fee/cost in general, but also in lieu of a more accurate way to describe the loan repayment convention. If anything, that fee may have been better defined as VARIABLE to indicate that it is at least partially negotiated. It may not quite follow the typical convention of fees applicable to other Banking products though.
The fee as defined is also distinct from the VARIABLE 0.0 rate which is described as the 'repayment percentage' ... 'the share of each PayPal sale' that the consumer would select when applying - this doesn't really follow the convention of those fields defined for other Banking loan products, and perhaps could have been described through an OTHER feature.
Happy to correct any mistakes or misunderstanding and hope this helps with interpretation and ongoing consultation.
anzbankau
commented
10 months ago @nils-work,
In relation to:
There is no upfront or separate fee charged, as I think was clarified by @PayPalAustralia in https://github.com/ConsumerDataStandardsAustralia/standards-maintenance/issues/531#issuecomment-1211438382:
PayPal Working Capital charges a one-time fixed fee along with the original loan amount, which is paid as part of the repayment cycle and not as an individual fee transaction.
and on the web page -
You repay the loan and fee with a percentage of your PayPal sales.
The cost is not an UPFRONT or EVENT fee, as I believe it is paid off over the variable period of time. It is also not a TRANSACTION fee in the sense currently specified in the Banking Standards.
I believe the intent of this change was to avoid the cost of this loan being called a 'rate' as it doesn't accumulate if repayments are not made (the percentage of sales value is not taken) when sales are not made.
We need to distinguish between the charging of the fee (also referred to as 'cost' above) and the repayment of the fee. The @PayPalAustralia comment in this change proposal you quote refers to a 'one-time fixed fee' and the PPWC website refers to the 'one fixed fee' (How is PayPal Working Capital Different? > How cost of loan is billed) and 'just one fixed fee, which we disclose upfront' (How does it work? > How much does it cost?).
The proposal for this in Decision Proposal 306 uses FIXED_COST and 'reflecting a negotiated or accepted fee or rental cost' to refer to the charge but applies it to the loan repaymentType and references ', rather than a fixed or variable interest rate' that both relate to the repayment:
#531 Define new Loan Repayment Type to relevant schemas Proposes a new loan repaymentType reflecting a negotiated or accepted fee or rental cost, rather than a fixed or variable interest rate. Proposal: To add a FIXED_COST enum to lendingRateType in BankingProductLendingRateV2 in PRD, which would allow the ‘rate’ field to be conditional. This value would then correspond to a new fixedCost UType in the account loan object.
Traditional 'fees' are not 'repaid' - particularly not through periodic payments or by applying a rate on other activities like sales transactions. Recognising that the PPWC 'fee' is a combination of interest in advance and a risk premium applied to the business loan account (not really visible to the customer), that's repaid through the customer-agreed rate applied to PayPal sales would help support this requirement without being highly specific to the PPWC product and the terminology it uses. If @PayPalAustralia confirms this, we suggest:
repaymentType = PRINCIPAL_AND_INTEREST or a new PRINCIPAL_ONLY or PRINCIPAL. This is the loan component to which the repayment is applied rather than a more general 'type' of repayment.lendingRateType = a new SALES, in the same way that PURCHASE is the rate applied to a customer's credit card purchases.We believe this would more accurately reflect the operation of the PPWC product/account, but the only area of the CDR data standards that supports a one-time fixed charge (comprising the interest in advance and risk premium i.e., the 'fee') is the BankingProductFee schema.
nils-work
commented
7 months ago Hi @PayPalAustralia
Changes to support your proposal have been included in the Candidate Standards for Banking.
Consultation on making the Candidate Standards binding is now open through Decision Proposal 338.
Description
PayPal Australia Pty Limited (PayPal) is a limited Authorized Deposit-Taking Institution with authority to provide purchase payment facilities. Its primary business is as a digital wallet provider that allows buyers and sellers to send and receive payments online. PayPal customers are able to store balance in their PayPal account and withdraw those funds to a linked bank account, pay for goods and services or make person to person transactions within PayPal’s closed network using their PayPal account. There are three (3) types of accounts offered by PayPal: a Personal Account, a Premier Account (no longer available to new customers) and a Business Account.
For the Australian Consumer Data Right (CDR) non-Individual data sharing release, PayPal will include two products in its data sharing catalogue, being its Business Accounts and a business finance solution offered to eligible Australian PayPal account holders called PayPal Working Capital (PPWC).
PPWC is a business finance solution offered by PayPal Credit Pty Limited (a related body corporate of PayPal) to eligible Australian businesses and administered through their PayPal accounts operated by PayPal. As a result, PayPal holds certain information in connection with PPWC product. PPWC provides eligible borrowers (Borrowers) with funds directly into their PayPal accounts. The Borrowers are charged a single fixed fee and the working capital is repaid with a percentage of the Borrower’s PayPal sales through their PayPal account. There is a minimum repayment requirement, but no late fees or penalties if a Borrower makes additional payments or early repayment.
Currently, there are several ENUM values within the Get Account Detail Banking API schemas that do not fit PPWC. This would require PayPal to return a value that does not accurately represent the character profile of the PPWC product. We are submitting a Change Request to have an ENUM value added to various schemas that would more accurately accommodate the PPWC product and its repayment terms.
Area Affected
repaymentType in BankingLoanAccountV2 and repaymentType in BankingProductLendingRateV2, which are present in responses from the Get Account Detail and the Get Product Detail endpoints.
Change Proposed
Currently, there are several ENUM values within the Get Account Detail Banking API schemas that do not fit PPWC. This would require PayPal to return a value that does not accurately represent the character profile of the PPWC product. We are submitting a Change Request to have an ENUM value added to various schemas that would more accurately accommodate the PPWC product and its repayment terms.
To enable PayPal to comply with regulatory requirements while also enhancing the user experience in comparing banking and financial institutional payment processors like PayPal, we would like to recommend the addition of a new ENUM value: PRINCIPAL AND FEE PAYMENT This new ENUM value should be added to the following schemas within the Get Account Detail Banking API: BankingLoanAccountV2 • repaymentType: current ENUM values: INTEREST_ONLY, PRINCIPAL_ANDINTEREST PayPal is requesting PRINCIPAL(AND_FEE) be added to this ENUM table. BankingProductLendingRateV2 • repaymentType: current ENUM values: INTEREST_ONLY, PRINCIPAL_ANDINTEREST PayPal is requesting PRINCIPAL(AND_FEE) be added to this ENUM table.