eBay is constantly innovating and changing to compete with other major online retailers. This is especially true as we head into a new decade in which eBay and PayPal will no longer be synonymous.
Going forward, eBay is working to integrate payment processing within its own platform. Read on to discover the lowdown on this significant change to eBay selling and the impacts that it may have on sellers.
What is managed payments?
The managed payments program will allow eBay to control the purchasing experience from start to finish for both buyers and sellers. Buyers will be able to pay for their purchase right on the eBay platform, without having to travel to a third party site such as PayPal. In turn, sellers will receive payment directly from eBay.
But wait, what about PayPal?
eBay acquired online payment system PayPal in 2002 and helped it develop to become the billion dollar company we know it as today. During this time, PayPal became the primary payment method on eBay, providing fast processing and additional protection for both buyers and sellers.
In 2015, however, eBay decided to spin off PayPal into a separate publicly traded company. Now, eBay is moving even further away from PayPal. In 2018, eBay signed an agreement with Adyen to become its primary payments processing partner.
What is Adyen?
Simply put, Adyen is a global company that processes digital payments. Specifically, Adyen specializes in back-end payment systems for online merchants, accepting over 200 methods of payments and 150 currencies.
Many major online retailers and service providers already use Adyen to process payments. Examples include Netflix, Spotify, Etsy, Uber, EasyJet, Booking.com and Groupon. Seamless integration is a key focus for Adyen, which is why the company itself is not a household name.
How does managed payments work?
eBay has communicated that the transition to managed payments will be a ‘multi-year journey.’ At the moment, only eligible sellers are being individually invited to join. eBay has, however, indicated that most Marketplace users will be transitioned by mid-2021.
After the transition, here’s how it works:
- Buyers and sellers do not need to have an Adyen account to use eBay’s new payment processing system
- During the purchasing stage, buyers will be able to pay with 150 currencies and choose between a variety of payment methods (credit card, debit cards, gift cards, Apple Pay, Google Pay, PayPal, and PayPal Credit
- The check-out experience will be very similar to other major online retailers, being completely integrated into the eBay Marketplace
- Sellers will manage all payment related transactions (sales, fees, payouts) on the eBay platform only
eBay believes that managed payments will have benefits for all users of their online marketplace. The main selling points are:
- Lower payment processing costs for ‘most sellers’ with a simplified pricing structure
- Streamlined payment process for both buyers and sellers
- Improved conversion rates due to buyers having more payment options
- Central payment management portal for sellers
What does managed payments mean for eBay sellers?
The introduction of managed payments is a significant change for eBay sellers. Here’s the lowdown:
- Sellers are required to comply with the managed payments transition to continue selling on eBay
- Registration for managed payments will require identity verification, bank account details and business information
- When a seller is moved to the managed payments system, existing eBay listings will be automatically transitioned
- Sellers should not include any details of accepted payment methods in item descriptions
- Payment processing fees will be added onto monthly eBay invoices. The processing fee structure is not clear yet, but Adyen does have a price list on their website
- Sellers will receive payment directly to their bank account. eBay states that sellers will receive ‘regular payouts,’ typically within 2-4 days of an order confirmation
- PayPal will still be a payment option within managed payments, at least until July 2023
Are there any concerns about managed payments?
Understandably, some veteran eBay sellers are wary about the managed payments transition. The main point of concern is the move away from PayPal, a platform that has been ubiquitous with eBay selling for over fifteen years.
While PayPal may have its faults, the additional seller protection has long been appreciated by many eBay sellers.
Other concerns about managed payments include:
- Lack of Global Shipping Program support (at time of writing)
- The risk of another major data breach, this time with payment processing details
- Increase of processing fees once managed payments transition is completed
- Slower payout processing compared to PayPal
- Increased control from eBay regarding all aspects of selling
- Anticipation that eBay will ask sellers to ship items before receiving funds
- Potential loss of income from buyers who prefer to use PayPal
With managed payments still being rolled out relatively slowly at this time, first hand knowledge of this new processing system is thin on the ground. The general mood, however, feels fairly negative so far across the eBay community. Change is always difficult, but for some eBay sellers, this move away from PayPal seems to be a backwards one.
What do you think? Are you enthusiastic or pessimistic about eBay’s move away from PayPal to managed payments and Adyen? Let us know in the comments below.