In the two months since eBay invited some sellers to participate in its initial launch of “managed payments” that is scheduled to begin this month, eBay has provided additional information about the program, although questions remain.
eBay is taking over managing payments from PayPal and expects to complete the transition by 2021. Why is it doing so? It explains in a FAQ:
“In today’s ecommerce landscape, shoppers expect to be able to check out and pay on the site where they’re shopping. With the new experience, eBay will manage the payments transaction, which means shoppers will be able to complete their purchases all on eBay. At the same time, sellers will no longer be paid directly from buyers via PayPal, and instead will be paid daily and directly to their bank accounts.”
eBay devoted a weekly chat in August to answering questions about eBay Managed Payments. The discussion was led by Vikas Mehta, who was described as leading the rollout of Payments in North America.
Right out of the gate, a participant posed a question that demonstrates how good sellers are at anticipating the consequences of eBay changes: “Are you going to brand it with something other than Managed Payments? How are you going to sell it to your shoppers,” the seller asked.
Mehta’s response to the question: “Our vision is to create a modern marketplace and managing payments is a core component to enable this. We want payments on eBay to be seamless, frictionless, and to allow maximum buyer choice to pay. Buyers will pay how they do today with alternative payment options, and sellers will receive funds how they want. We won’t look to create a separate brand or sell it to shoppers.”
eBay may not be branding it or “selling it” to shoppers, but it kicked off a promotion on Thursday in which it gives buyers coupons for paying with debit or credit card “directly on eBay.” But since buyers can’t tell whether entering a credit card number on a listing is powered by PayPal, a merchant’s own credit card processor, or eBay managed payments, we wondered how they could determine which listings they’d be able to use the coupon code.
When it comes to seller disbursements, Mehta’s response is akin to Henry Ford’s response to Model T customers when Ford reportedly said, “You can have any color – as long as it’s black.” Mehta said, “sellers will receive funds how they want” – but it became clear during the session that eBay sellers can have their funds any way they want – as long as it’s a bank account and with daily disbursements.
In addition, there will be a lag of at least 2 – 4 business days between when the seller pays for shipping and when they receive the disbursement from eBay.
Mehta said, “We want sellers to receive their funds as quickly as possible. Generally, you’ll get paid daily and directly to your bank account, regardless of which payment option the buyer selects. Depending on your bank, you can typically expect payouts to be sent to your bank account within 2-4 business days of an order confirmation.”
And in response to a question about the possibility of more flexible disbursement schedules, he wrote:
“We have heard this from our sellers as an ask and while not available for the initial launch, is something we’re looking at.”
A seller replied, “Many banks limit the number of transactions allowed per month,…After that, a fee is assessed for each transaction. I will have to find a new BANK, and open a new account, once this change becomes mandatory. Not a happy camper!”
(We can attest to this, though the number of transactions allowed per month can vary greatly depending on the bank and type of account.)
Mehta also made clear that while eBay would disburse funds to sellers’ bank accounts, it would continue to require they use PayPal for paying for shipping labels. “The shipping label purchase procedure stays the same as it is today – you will use your PayPal account to purchase labels.”
That prompted more questions. A moderator facilitating the discussion reiterated: “You will not be able to use funds from sales for postage and eBay purchases.”
That’s a major sticking point for sellers due to cash flow issues. Currently, when a buyer pays for an item using PayPal, the seller has immediate access to those funds, which they can then use to pay for the shipping label – and other expenses, for that matter.
That could make more sellers open to the idea of using third-party postage systems. Stamps.com and Endicia, for example, allow sellers to pay for postage using their credit card or ACH, with a $10 minimum postage purchase (prefunding is a requirement). Using a credit card takes off the cash flow pressure while enabling sellers to accrue credit card reward points.
In response to concerns about the lag time between having to pay for shipping and receiving payments for an order, Mehta suggested sellers consider getting a loan through Square Capital, with whom eBay conveniently partnered with recently – we’re not sure if eBay gets referral fees or other compensation through the deal.
Mehta also clarified some terminology – what is rolling out this month is not a beta test, but rather, “It’s the initial launch of a multi year initiative to bring to life our vision on managing payments.”
As many readers know from our previous coverage, PayPal will not be a payment method for buyers in the initial launch of managed payments – credit and debit cards and Apple Pay will be the only payment options offered. “Offering PayPal as a form of payment is a top priority for us and will be added by the summer of 2019,” Mehta said.
“In the end state, buyers will have a number of choices including debit card, credit card, PayPal, apple pay and other common forms of payments. Sellers will have a simpler one stop place with consolidated reporting, fees, dedicated customer support for all their eBay sales.”
Mehta also addressed a question about the costs of using eBay’s managed payments. “Our goal is to have selling fees lower than they are today. The payment processing fees for the initial launch are a flat 2.7% with no fixed fee, and no refund fees. This is your rate through 2021 for signing up for the initial launch of managed payments. Over time, we may make changes to the way the fees are structured or bundled in the future. We have no plans to change pricing at this time and are committed to leveraging payments as a way to deliver more value to our sellers.”
The big concerns we saw reflected the questions sellers raised during the session included the following:
1) eBay won’t disburse payments to sellers’ PayPal accounts; the only option is to provide eBay with a single bank account for all disbursements.
2) There will be a lag between when the seller must ship and when eBay disburses funds for a transaction.
3) eBay will require sellers to use PayPal to pay for shipping labels.
4) Buyers won’t be able to pay using PayPal until next summer.
One seller was concerned that since buyers can’t identify listings that offer managed payments, buyers would become angry at sellers upon discovering they wouldn’t be able to use PayPal to pay for their purchases. It’s not an unreasonable concern given the way eBay has historically mandated the use of PayPal on its site.
“I’m having this mental image of a spirited auction ending in a nice high sale, only to have the buyer then discover that the seller doesn’t take PayPal,” the seller wrote. We didn’t see a response from eBay about this particular concern.
Mehta gave the following plug for participating in the program toward the end of the session:
“We wanted to get the product live and in the hands of our community as soon as possible so we can grow and build the experience together. We realize joining for the September launch might not be suitable for everyone. Each seller needs to judge if signing up is right for them for the initial launch. We don’t have timing on GSP (Global Shipping Program) availability at this point, and GSP remains a key priority. We will continue to improve the experience by including PayPal as a method of payment, GSP inclusion, and better shipping integration post launch.
“Sellers in the initial launch have an opportunity to influence how the world sells and gets paid on eBay”.
We’ve published additional information about eBay managed payments, including the news that sellers won’t be able to use many third-party tools upon initial launch, which you can find in the Related Stories section below.
And be sure to read Thursday’s EcommerceBytes Blog post, which has a screenshot of a listings offering managed payments.
eBay Resources on Managed Payments
Managed Payments on eBay (link)
August Chat on Managed Payments (link)
eBay Bans PayPal in Early Payments Beta (link)
eBay Addresses PayPal Omission in Beta Test (link)