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Warning for eBay Sellers with PayPal Loans

eBay
eBay

Warning: eBay sellers with PayPal Working Capital loans will need to start repaying those loans manually if they are among the sellers who are being forced into eBay Managed Payments this month.

The operating agreement between eBay and PayPal is ending 5 years after the companies split, and eBay is forcing many US sellers into the eBay Managed Payments program as early as this week.

Currently PayPal automatically deducts loan payments from the seller’s PayPal account as sales are deposited.

But once a seller is enrolled in eBay Managed Payments, PayPal will no longer be able to see eBay sales even when buyers pay for their purchases using PayPal. eBay states in a FAQ on its Managed Payments landing page the following:

Can I use PayPal Working Capital (PPWC)?
We want to ensure your transition to managed payments is as smooth as possible. Once your account is enabled for eBay managed payments, you may need to take additional steps to repay your PayPal Working Capital loan.

When eBay manages payments, your sales activity is no longer visible to PayPal. If you’re a PayPal Working Capital customer, that means that even when PayPal is included as a checkout option, PayPal will no longer be able to see your sales or be able to deduct automatic loan repayments from your eBay sales.

PayPal has a number of free and easy solutions to help you manage your PayPal Working Capital loan repayment and can also provide information about other financing options. To ensure your obligations are fulfilled, please visit PayPal Working Capital to understand the actions you need to take.

A PayPal spokesperson told EcommerceBytes that sellers are still obligated meet their PayPal Working Capital Minimum Payment requirement. Sellers can do so by manually making additional payments from the funds in their PayPal balance or from any verified bank account in their PayPal wallet.

Sellers can check their Minimum Payment requirements, which are due every 90 days, anytime by logging into their PayPal Working Capital dashboard. They can click “Make a Payment” and follow the instructions, the PayPal spokesperson explained. Sellers paying from a bank account can schedule up to 12 payments.

PayPal had raised the issue of loan repayment with eBay sellers in 2018, issuing a stark warning that they would be out of compliance with the terms of their PayPal Working Capital loans if they migrated from PayPal to eBay Managed Payments.

At the time, eBay told us it had no visibility into whether sellers did or did not have PayPal Working Capital relationships and said it could not advise them on the terms of their relationships with PayPal.

Two years later, as eBay gets ready to migrate many more sellers into the Managed Payments program, PayPal initially appeared to have a solution in mind for sellers with PayPal loans. It sent a survey to sellers describing a hypothetical Direct Deposit feature, stating, “Since your marketplace sales aren’t processed through your account with PayPal, you can’t automatically repay your PayPal Working Capital business loan. That could make it harder to be approved for a loan down the line. But don’t worry, we’ve got you covered with PayPal direct deposit.”

However, PayPal’s spokesperson told us this week the survey about PayPal Working Capital (PPWC) was to gauge interest from the seller community. “No product of this type has rolled out.”

“We are working on a way that provides PPWC borrowers a simple, seamless, and transparent way to repay outstanding PPWC balances that, though different, keeps with these same characteristics and provides PPWC customers a similar experience to what they are used to,” he said. “This method will ensure loans remain in good standing and optimizes future PPWC eligibility for those customers.”

Look for solutions in early August – eligible customers will receive an email and notice on their PayPal Working Capital dashboards when they become available.

PayPal also noted that the PayPal Capital Loans lender, which is WebBank in the US, won’t be able to assess eBay sellers’ loan eligibility based on eBay sales. “This may make it more difficult for eBay sellers to repay their loans, meet the terms of their loans, and could impact future loan offers,” the spokesperson said.

However, “PayPal is also working on a number of exciting developments to PayPal Working Capital that will expand flexibility for merchants who sell on eBay and other marketplaces.”

eBay also has plans for providing sellers with working capital loans. On its Managed Payments page under the FAQ, “What are my options for working capital,” eBay states: “Coming Soon: We will be introducing financing options from eBay Seller Capital powered by LendingPoint. Sellers can get fast, flexible and transparent financing with no origination or early payback fees.”

“eBay Seller Capital powered by LendingPoint” appears on this undated landing page, making it unclear when eBay published it. Interestingly in 2018, eBay had entered into a deal in which it would market Square Capital directly to eBay sellers.

Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

7 thoughts on “Warning for eBay Sellers with PayPal Loans”

  1. HA HA Ebay would be the last place I would ever borrow from. They lie so bad they can’t be trusted for anything. My bank is more than willing to loan me any money I might need. Thanks but no thanks Ebay.

  2. Those loans are BS. Go to your bank. The loans paypal, and probably ebay end up being anywhere from 12-22%. Go to your bank you will get %7, and on top if it with the bank if you pay it off quicker it costs you less. PP and ebay you pay a flat fee, so there is no Int. rate (you pay no matter weather you pay fast or slow).

    1. i borrowed $11,000 and paid a $886 origination fee which is about 8% interest.
      Pros:
      -no credit check [if my credit was jacked-up, i’d still qualify based on my PP sales performance]
      -no hard inquiry on my credit file, nor does it show up at all
      -online app took 5-minutes
      -my paypal account was funded on a Saturday night at 10PM (can you go to a bank at 10pm and get an instant loan)
      -my paypal debit card gives me INSTANT access to my funds immediately
      -1.5% cash-back on all purchases for new inventory, so, that basically reduces the “interest rate”
      the finance charge will NOT increase if i take longer to pay it back
      -i make sales everyday, so, im making a repayment everyday

      Cons:
      –30% per sale repayment fee

      i can only assume that you’ve never actually had a PPWC loan before

    2. My experience with PPWC is similar to @eyeflipdaily. Very easy to get the funds, not too painful to pay back, decent interest rate. Just skipping all the income / sales history / tax returns / references / past loan history stuff was worth it. I use the funds to buy large collections when they become available, and the profits from that pay the interest several times over. Works great to me. Or used to. We’ll see how that sorts out going forward into the MP age.

  3. Banks are a pain in the ass when it comes to getting loans if you’re an online seller !, they want to nit pick every little detail of every word of every sentence, in search of the slightest thing they can find to reject you for !, Plus, you can walk in with 200k Worth of sales reports and Paypal statements, and its meaningless to them, the ONLY thing they care about is “where’s your tax returns ?”, So if you filed an extension or haven’t gotten them done yet, tough crap for you, No money, have a nice day !. Paypal working capital loans are WAY easier, or atleast they WERE before they got dropped by Ebay, we’ll have to see how things materialize in the near future, But I’ve borrowed about 100K in working capital loans over the last 10 years from them and never had any issues, I sell more than enough stuff monthly to cover the payments, and its MUCH easier and effortless to just set them on auto-deduction so that it takes a small percentage of every ebay sale until its paid off, I can have the average 10k Loan paid off in 3 months or less, with it only taking 10% of each item sold, So now that Ebay decided to screw things up and drop them, how are they supposed to guarantee you these big loans of 30K or more without knowing how much you’ve sold in the last 12 months, and without being able to withdraw from each sale ?. I highly doubt that Ebay is gonna step-up and start offering to give us 30k at a time, Nor would we take it without checking every word of the contract beforehand, the way that ebay has been stiffing sellers the last 2 years, with this huge emphasis of kissing the asses of buyers and telling sellers to shut up, sit down and obey, it would be only a matter of time before they would use those loans as leverage to start intimidating sellers into doing what they want “or else”. Plus as far as the fees are concerned with the former paypal loans, I borrowed 33K back in 2016 and the payback amount was 36k, it was a total of 3k for the fee, which even if it is a little higher than a bank might be, its worth it to avoid the aggravation, and not have to go out of your way to spill your whole life story and a pound of documents for the people at the bank, Just log on, let paypal scan your gross sales for the last 12 months, and then see what the system offers, it will say your guaranteed up to X-Amount, you choose the amount you want, agree to the terms and the money gets put in your account within minutes or less, and there’s no worrying about having to pay a minimum monthly payment like you would with a bank, if you sell much less than usual one month, no big deal, and if you sell much more than usual, then great, you paid a little more towards your loan than you did last month, and you had it to pay, so it wasn’t a big deal.

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