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The recent news about the eBay andPayPal split marks the end of an era. Here is what you need to know about payment processing if you sell on eBay.
eBay has updated its terms of service to say that sale proceeds on the site will no longer be processed to a seller’s PayPal account. Instead, sellers will need to set up for payments to be deposited directly into their bank accounts.
eBay said it is seeking to manage all payments so that sellers can sell in a unified transaction without the need to pay third party processing fees. However, these managed payments come with a brand new processing fee from eBay—$0.30, plus a certain fraction of the price paid. eBay is promising sellers that whatever cut eBay ultimately takes will usually be lower than the roughly 13% combined charges for eBay commissions and PayPal fees.
A breakup that was a long time coming
PayPal had been eBay’s main payments provider since 2003, which is also the same year that eBay acquired PayPal for $1.5 billion. Although eBay and PayPal split their combined corporate ownership in 2015, they maintained close business ties.
This news isn’t much of a shock to anyone who’s followed the eBay/PayPal saga. When PayPal was officially spun off from eBay in 2015, there was an agreement that it would keep managing PayPal payments for an additional five years. In the meantime, eBay joined forces with another payment processing company, Adyen, and began rolling out beta versions of it in 2018.
By the end of 2020, eBay reported that about 340,000 sellers had opted into the new payment platform.
The eBay and PayPal split is intended to benefit buyers
eBay asserts that the e-commerce landscape is becoming increasingly competitive. Users expect to be able to both shop and check out without leaving the platform. Because PayPal is an external provider that requires the buyer to go offsite to complete the payment, eBay wants to keep everything in-house and on-site with Adyen.
Adyen’s service extends to more than 150 currencies and over 200 methods of payments, which eBay says provides increased flexibility for its users.
What the eBay and PayPal split means for sellers
In explaining the new program, eBay noted that its deadlines for all users are “phased.” Some sellers were told to swap out their PayPal login with the details from their checking account by midnight on June 1. Others will hear before the end of the year about how to make the transition. eBay wants sellers to provide them with “some additional payments-related data and transition to a new relationship with eBay that includes integrated payments capabilities”.
The company says that as of June 2021, sellers are required to complete these steps in order to continue selling on eBay.
While eBay is light on details right now, it has hinted that sellers can expect a suite of new tools and dashboards to help them manage their business.
PayPal to remain as a payment option
It seems that PayPal will continue to have a place on eBay, it will just be less prominent. Sellers who rely on PayPal to do business on eBay don’t have to worry–yet.
The option for payment via PayPal will remain on eBay until July 2023, allowing plenty of time for sellers to transition to the new system.
What eBay sellers are saying about the eBay and Paypal split
Reviews have been mixed. Some sellers are complaining that these new direct deposits can take up to a week instead of the promised two days. Others have reported that their deposits are being frozen. These are hiccups that eBay needs to fix before mandatory payments apply to everyone.
One longtime eBay seller commented: “Ebay has managed to make something that should be irrelevant into an additional pain. They could have made it so new users started on the new system. Or they could have come up with a ‘system’ (really it’s a lack of system) that actually competed to give benefits instead of just deciding to switch things selfishly and forcing their customers to come for the ride.”
Another seller commented that “Nobody ‘casually’ sells on ebay anymore. Unless you have a particular sort of item (collectible/antique or new/hot commodity), ebay is no longer a useful place for a ‘bidding war garage sale’ like it used to be in the before times.”
The consensus seems to be that anyone selling on ebay is either a serious seller or wants to become one, and serious sellers will calculate that 13% fee into their business model.
My mission at Shoppingfeed is explaining how to leverage e-commerce platforms and SaaS technology to e-merchants who just want to run their business and make more money.
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