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eBay PayPal payments integration means loss of merchant rate discounts

By Chris Dawson October 3, 2018 - 12:56 pm

eBay Managed Payments is live with the first seller transaction having already taken place without the eBay PayPal payments integration. It will be a seismic change for the eBay marketplace which has never before had an integrated payment solution.

Many will have considered PayPal to be an eBay integrated payment solution, but in truth, even when eBay owned PayPal, there was a dichotomy with two completely separate sign ins and two different sets of customer support and even two different appeals processes although they were supposed to work in tandem. Prior to PayPal there was BillPoint and again this was simply a payments company eBay acquired and bolted on the side but still entailed a separate user agreement and log in.

Now for the first time in their 20 year history, eBay are rolling out a unified payment platform with a single sign in, just like every other retailer in the world does. The current eBay PayPal payments integration will come to an end and, so far, the one thing that’s missing from eBay Managed Payments is PayPal and it’s worth taking a look at what will happen when eBay and Adyen (the chosen payment engine) add PayPal back in. First however, PayPal won’t even be the first eBay Managed Payments integration – this will be Apple Pay which is one of the key benefits of moving away from the current eBay PayPal payments solution. Adyen will enable eBay to add many more payment options then PayPal offered.

For those in the US that have opted in early to eBay managed payments, there is no PayPal and PayPal aren’t scheduled to be added in until the Summer of 2019 at the earliest, but which time it’s expected that eBay Managed Payments will be rolled out to other countries. This won’t be PayPal as you know it today however.

With eBay managed payments, just as today you don’t know if a buyer paid with a PayPal balance, a debit card, a credit card or Pay after Delivery, with eBay Managed Payments you won’t know if a buyer used their bank card or paid via PayPal. When PayPal is integrated, it will effectively be eBay’s PayPal account that receives the funds from the buyer and you’ll be paid out directly into your bank account just as if they buyer had paid with bank card, Apple Pay or any other payment methods that might become available.

The end of the eBay PayPal payments integration means an end to PayPal merchant rate discounts. This will be far reaching beyond eBay as you may benefit from PayPal merchant rates for your website transactions as well as on eBay. If you lose your eBay transaction volume from your PayPal turnover you could quite conceivable be on a much lower discount tier and your website payments will cost you more as a result.

When eBay start offering PayPal through eBay Managed Payments they’ll be the ones to benefit from any merchant discount rates and whilst they’ve said “Most sellers can expect lower overall selling costs in the new payments experience” they haven’t specified if this is low volume sellers or high volume sellers. It may well prove to be the case that the largest sellers who enjoy the lowest merchant rates on PayPal end up paying more in fees to eBay managed payments.

The biggest difference of all is that eBay buyers and sellers will no longer have a PayPal balance available from sales on the eBay marketplace. Your own personal PayPal account will never again receive payments from eBay sales as they will go directly from eBay Managed Payments into your bank account.

Currently, sellers in the US have a choice whether to opt in early to eBay Managed Payments and many thousands have. Those who haven’t will continue with the current eBay PayPal payments integration until the day eBay makes eBay Managed Payments mandatory.

It’s time to start planning for the change which is coming however, especially if you are going to end up with higher payment rates for your website through loss of your PayPal merchant rate when your eBay transaction volume disappears. Are there alternative payment methods, just as convenient for your buyers, that you should consider and most importantly, without your eBay volumes, will PayPal still be as attractive from a fee perspective or will they suddenly appear an expensive option for your website?

  • 3 months ago

    And who is going to benifit from this. Ebay and Ebay only.
    Even the customers will have to pay more as we are on 1.9% with Paypal and I think I saw a quote with Adyen the other day and we are going to be charged 3.4%.
    That’s a big difference over a year and that extra amount will only land in Ebay’s bank account.

  • Dave
    3 months ago

    Absolutely dreadful news. And not because of the loss of the 1.9% +20p rate that we get, but if it goes ahead like this, that the end of PayPal Working Capital.

    PayPal Working Capital has been and continues to be a key part of our business and has been critical for our cashflow, allowing us to plan ahead, purchase stock and fund our business.

    As the loan amount and rate is linked to the amount of cash that you put through PayPal, this will dry up almost completely and that will cause considerable stress for our business for no apparent gain to us whatsoever.

    It is cashflow that kills small businesses and that has been provided to us by PayPal. I’m very concerned for next summer now.

  • Dave
    3 months ago

    Absolutely dreadful news. And not because of the loss of the 1.9% +20p rate that we get, but if it goes ahead like this, that the end of PayPal Working Capital.

    PayPal Working Capital has been and continues to be a key part of our business and has been critical for our cashflow, allowing us to plan ahead, purchase stock and fund our business.

    As the loan amount and rate is linked to the amount of cash that you put through PayPal, this will dry up almost completely and that will cause considerable stress for our business for no apparent gain to us whatsoever.

    It is cashflow that kills small businesses and that has been provided by PayPal. I’m very concerned for next summer now.

  • Brendan
    3 months ago

    Unless eBay are going to match or improve on PayPals current merchant rates then this move is bad for sellers, simple as!

    Knowing how eBay have implemented returns, seller standards and other policies this will no doubt be a half assed payment system with eBay doing a smash and grab.

    I will only be moving when mandatory. It’s my only way to protest. Hopefully it happens in volumes if eBay don’t offer a fair system and rate.

  • susan hannington
    3 months ago

    Hi. I think that this is a very bad move on ebays part as they will inevitably lose a lot of business from sellers who will probably go elsewhere to sell their items. I like the fact that my money goes into my paypal account so that I can build up it up before transferring it to my bank account. I do not want it to go straight into my bank account. I also understand that ebay will be the ones to benefit from this change. I am very disappointed by this situation as I have been with ebay for some years now and I am sure that I am not the only one. Loyalty to ebay must means something. Regards Susan

  • 3 months ago

    As above, totally bad news for sellers… & eBay, as they will suffer long term.

  • bryan gostling
    3 months ago

    I totally agree with what Sue says above – “I think that this is a very bad move on ebays part as they will inevitably lose a lot of business from sellers who will probably go elsewhere to sell their items. I like the fact that my money goes into my paypal account so that I can build up it up before transferring it to my bank account. I do not want it to go straight into my bank account. I also understand that ebay will be the ones to benefit from this change. I am very disappointed by this situation as I have been with ebay for some years now and I am sure that I am not the only one”

    I also build up funds in my paypal account and use them to buy items mostly from ebay. Without that pot of money I WONT BE BUYING FROM EBAY.

  • 3 months ago

    THis will be catastrophic for most business sellers large or small. Most are already struggling with cash flow. Not sure if I trust Ebay with funds either.. Certainly do not trust them to look after sellers in any form. Loss of working capital will be terrible and any increased costs is yet another nail in the coffin.., Lid almost on!!!

  • Ferret
    3 months ago

    Banks charge per transaction…this will massively increase transactions going into the bank (rather than one accumulated transaction from PayPal)

    More cost overheads

  • 3 months ago

    If your bank is charging you per transaction for electronic/online transfers, then you’re with the wrong bank. Change banks. All s
    orted.

    If you don’t want ebay payments going into your business current account daily, then don’t do that. Have them sent to another account and treat that as the replacement for your paypal account. When the time comes, I’ll have it set up so they go into the business saving accounts, which isn’t currently being used for anything, so is available. You probably have one already. But if not, ask for another account at the bank.

    • 3 months ago

      I will probably look to set up an Adyen account and have it paid into that.

  • timo
    3 months ago

    If the incoming money is going to bypass the paypal account, where are they going to automatically take the fees from?
    Like others above I like to build up a good balance on paypal then transfer as I wish; always living working capital to buy stock (on ebay & elsewhere) and to of course cover fees at the turn of the month.

    • james
      3 months ago

      They pay you, so they take the fees off your payment before you receive it.

  • Jonah
    3 months ago

    Dreadful news again on the eBay platform- death from a thousand cuts. Will eBay still bill sellers monthly? Or will they take eBay fees along with the “managed payments system?
    Many buyers will simply give up- further losses at checkout will inevitably occur.

  • Terry
    3 months ago

    I am sure this was originally presented by E-Bay as being ‘cheaper’ than Paypal, so we should all be jolly happy about it.

    The truth seems like it might be rather different, the headline rate might be cheaper, but for anyone doing any significant volume through Paypal thus benefitting from reduced rates, the blanket cheaper statement now appears to be an outright lie.

    I am hoping this is just something that will all come out in the wash and that the rates will at least not be an increase on what Paypal charge now. There is still quite a lot of time before this is live for all, so perhaps things can change. In the meantime, I shall work on what I need to do to put the prices up yet again to cover any cost increase.

    I wonder if the phrase ‘cannot get blood out of a stone’ exists in the US ??

  • Tonya
    3 months ago

    I spoke with ebay yesterday. The fee that they will be charging for payments will be added to your regular monthly ebay fees. So, they are NOT taking them out first befiore giving you the money Another problem for me is shipping. I print shipping labels through paypal and since there will now be no money flowing through paypal, I will have to find another way to ship that doesn’t require me to stand in line at the damned USPS, which for me here is a realy PITA! I asked if they were working on a solution for that and she said yes. But, no telling when that will be. Also, another thing I don’t like is that if someone pays for something today, it will be 2-3 days before their money is available to send to my bank account but they still want me to ship it out as soon as payment is received. So, we have to put the shipping cost out before we ever get their money. So, if someone pays on Monday, funds will not be available for 2-3 days and then it will take another 1-3 days for the money to show up in my bank account. So, it could be the following Monday before I see the money! I’m definitely not happy about this!
    Global shipping plan will cease to exist as well until they find a way to integrate it back in so I will lose my overseas sales because I am not standing in line at the post office with custom forms for every one.
    SMDH – I don’t know who’s bright idea this was, but it stinks all the way around for sellers.

  • Jeff
    2 months ago

    This is what happens when power is passed from one acolyte to the next, under the last two nepotistic ‘top’ appointment, eBay has flailed around from one poorly conceived change to the next.

    Sellers always moaned before these two incompetents were let loose, but it was a better place, people sold, people searched, people had opinions but generally were ‘okay’. But this place has been sailed blindly, recklessly into a mine field by two woefully inept CEOs, isolated from what ebay is/was by their inherent Wall Street avarice, an inability to listen to customers needs to a stratospherically arrogant degree, and plain and simple ignorance. eBay is dead, many will see no reason to purchase from this crippled site once the last bit of ‘convenience’ is stripped away. Amazon must be rubbing their hands together with ebays astounding ability to repeatedly self harm.

    Of course, the two who gave eBay the cancer it’s riddled with, will be rewarded, they were rewarded the first day the ink dried on their contracts, eBay has a recent history of rewarding poor exceptionally leadership at the highest level. RIP eBay, it’s hard to see how you’ll be missed considering your current state of affairs.

  • 2 months ago

    We must look for other options (Platform) as a seller!!! I slowly stop do business with ebay last year because I been reading the company news press. they’re a great platform for selling items but the company is killing itself with these foolish moves.

  • Gareth
    2 months ago

    How does this work for an eBay account that sells on my than one site and takes multiple currencies. For example if I have a transaction in US dollars on eBay, but need it paying into my bank that’s in pound sterling, I get charged a hefty fee. Can it be converted first? At least with Paypal I could hold funds, manage currencies, and wait until the currency exchange was more favourable before transferring to a bank. I tried to contact Adyen for an explanation as to how it would work, but they weren’t interested and said it must be directed to eBay. eBay need to provide more clarification as to how these problems will be resolved.

    • 2 months ago

      @Gareth Frustrating as that is they were right that you should address the problem with eBay as it will be up to eBay how things will work.

      This is the simplest scenario that I see working.

      eBay will hold an Adyen business account like most other people hold a Paypal account, they will have various currency accounts and you will be paid from each one into your nominated account.

      If you are using Paypal the money should be allocated to your right currency account. Unfortunately High Street banks would probably not work this way, I assume Adyen would.

      My plan at the minute is to set up an Adyen account in which I guess you can set up multi currency accounts as you can in Paypal.

    • gerry007
      2 months ago

      Clearly Adyen are being lead/controlled by ebay……..

  • Gareth
    2 months ago

    Thanks Tyler, I don’t entirely understand how it works, but from my limited understanding eBay is the client and Adyen carries out the transactions using their system, after which payment made by eBay to the eBay seller’s bank account?

    When you say they have various currency accounts, do you think it is possible for them to pay in one currency? For example if you list on eBay.com in dollars, could eBay see that your designated bank currency is in pound sterling, and pay you the equivalent based on whatever exchange rate they provide on the day?

    If you sign up for an Adyen account, is it possible to have it paid there instead, like Paypal and therefore manage the currencies and when to transfer to a bank account at a time of your choosing?

    • 2 months ago

      @Gareth My above was only a guess at how it may work, which I think is going to be different to how the eBay / Paypal relationship worked due to eBay setting the charges not Adyen.

      Until eBay open up to what is actually going to happen after the trial period we will not know much more.

      From what has already happened I am guessing that eBay realise they are shooting themselves in the foot trying to implement this idea, they need to give it a serious rethink or they will kill their own marketplace.

      Customers are very fickle, many will not like the idea of moving away from Paypal, they have to run them as dual payments for a time to build confidence and, as somebody else said, offer incentives for customers who make their first purchase through the new eBay-Adyen system, you can not just force new ideas on people like this.

  • Gareth
    2 months ago

    @tyler I remember the days of Billpoint, but don’t recall there being any hardships or problems. Paypal surely wasn’t all plain sailing and never has been, but it’s worked well for me. As a seller and a buyer, it’s perfect to have the funds there, to purchase, and pay eBay fees without having to use a credit card or bank account.

    Looking at the Adyen website, there doesn’t seem to any way to sign up for a regular Joe, in terms of having the equivalent of a Paypal account. They just deal with the transactional side of things. Adyen’s eBay FAQ doesn’t address currencies and international sales or the managing of currencies. As the transition won’t be complete until 2021 I hope it gives everyone enough time to sort out all these problems. I don’t have much faith in it, and certainly would prefer not to complicate things. I have regular buyers who are very happy to use Paypal and can make payment with a single click. This step is purely for eBay’s own profit driven interests, and as you say they’re surely shooting themselves in the foot here. I don’t see how it benefits the majority of its buyers and sellers.
    As Paypal will be an option (by mid-2019) on the eBay managed payment scheme, I hope it continues to thrive, especially for seller’s like myself who need to manage their currencies, and time the best moment in which to convert them.

    • 2 months ago

      @Gareth As Paypal is an option on the Adyen payment system I do not see why eBay can not take Paypal from the start.

      The below will explain a little bit more, or at least show you how it will be set up

      https://docs.adyen.com/developers/marketpay/marketpay-overview

      But will not answer many of your questions.

      eBay will have total control of how and when the funds are distributed to us sellers and this can be set per seller with the right programming.

      There will be a huge amount of work involved in the change over as all sellers will need to be verified by Adyen to comply with the KYC – Know Your Customer money-laundering regs.

    • Gareth
      2 months ago

      @tyler The rollouts are very slow – I’m glad I’m not one of the first guinea pigs, as they’ll surely be many hiccups. According to some sources they might ditch Paypal altogether in a few years (2023 was one number given). This is the problem when competition, politics and personal rivalry come together. Maybe it will all pan out, but I’d surprised if it didn’t harm eBay, at least in the next few years.

  • gerry007
    2 months ago

    Oh dear, and all for an extra 0.01-0.02% points profit…..

    Ebay shareholders made a ton from freeing Paypal into a separate Co, now the real price is to be paid by all the others…

    Disgraceful, but expected in today’s money grabbing Corporate institutions……

  • Stan
    2 months ago

    Fantastic news! Goodbye Paypal!!!

    • alan paterson
      2 months ago

      Paypal has been a great support for our business. They are always fair with disputes and often refund me AND the buyer.

      Compared to a normal merchant service they are a ‘breath of fresh air’ as you can always talk to a real person if need be. The resolution centre on paypal is far superior to the chargeback procedure of any bank.

      I am sorry the way this is all going. Although we will still use them for our web site.

  • 2 months ago

    Whilst Paypal support has always been courteous, we have never found them to be fair, in the strict dictionary definition of the word.

    They are fair in following their procedures, but their procedures themselves are unfair.

    We’ve had a few issues over the years, mainly with chargebacks. On each occasion, the chargeback has been challenged and we’ve lost on each occasion. Even where we have received positive feedback and have provided proof of delivery.

    Like all sellers, we will look at the new fees and how well the system works.

    Having everything under one roof ought to reduce fees, make it harder for scammers and get rid of the Ebay / Paypal divide that has caused problems.

    But will it deliver for sellers, not just for the Ebay board and shareholders?

    • 2 months ago

      @Andy We just had a case found in our favour with Paypal. The buyer did not complain to eBay but went direct to Paypal.

      Once the system moves to Adyen it will not be Adyen in charge but eBay, if buyers don’t want to deal with eBay they will not go to Adyen but back to their credit card company.

      As long as eBay watch buyers performance it could be for the better, in the long term.

  • Jonah
    2 months ago

    PayPal working capital is a lifeline for many small businesses. I’m not saying Adyen won’t offer the same service, but it all seems very much of a headache to earn eBay that extra small percentage point profit whilst the rest of us have to deal with the aftermath and fallout of the inevitable abandoned baskets at checkout. It’s ebays call, it’s their platform after all. However, if merchants suffer this will undoubtedly be the final nail in the coffin.

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