eBay seller Don Heiden, aka the Auction Professor, discusses his experiences with eBay Managed Payments.
I have been an eBay seller for most of my life. Over the years, most every aspect of the platform has changed or morphed into something almost unrecognizable to those who have been on the site since its beginning. Most of the site features we take for granted these days were simply not available just a few years ago.
Many of the changes and updates eBay does are very helpful to the vast majority of those on the platform, while others seem to be completely counterproductive with little or no benefit to the seller.
eBay’s ability to properly roll out some of these changes should also be of major concern to any seller who has been on the platform for even a couple of years. Most of us know their track record is not so good with their handling of updates, and site issues. Their timing is even worse with many updates scheduled to start during the fourth quarter, which is the busiest time of the year for the majority of resellers.
They are also not the best at informing people of changes or issues when they do happen. Many of us will remember when eBay lost tens of millions of photos from millions of different sellers a few years back and did not acknowledge it for days. They also had no fix for the issue, forcing sellers to spend hours retaking photos, and uploading them back to their listings.
So, when eBay announced their new managed payments program, most resellers were skeptical, at best. The thought of trusting eBay with personal banking information when they could not even hold on to uploaded images was pretty scary to some.
Many of the details they released about the program were vague, and some issues were not covered at all until you were already in the program, such as the banned items list. The banned items’ list is a list of items you cannot sell under managed payments. But managed payments is required, so I hopped right in and signed up as soon as I got the invitation to join.
I joined with low expectation that it would go smoothly. After being on Managed Payments for the better part of a year, the only issues I have had (so far) happened during the registration process. There seems to be an issue sometimes with eBay’s payment system not properly linking your banking information to their system, and I was required to re-register several times. Once that was fixed, it has been smooth sailing ever since.
When you are first placed into Managed Payments, you are automatically set up for daily payouts to your linked bank account. It did take a week or more for the first initial payment to process and post to my bank, but after that, it has posted my funds without fail.
eBay offers two options for payouts. You can either choose a daily or a weekly option. I also had to set up PayPal as my payment method for my shipping labels purchased through the site. There was no option to have those fees taken out of my payouts when I first signed up. Thank goodness they have since made that option available.
I switched to the weekly payout option, and now have my shipping label fees taken out of my payouts, which is something I honestly would recommend to everyone. Using this option, you avoid using a separate payment site, such as PayPal, to pay for your labels. This will save you time and worry at the end of the year when it is tax time, because you would only need to check eBay for your expenses, instead of eBay and PayPal.
You should be aware if you are using eBay’s international standard delivery option; these fees will not be taken out of your payouts, but will be added to your monthly bill. This is not very widely known, and it could give you a bad case of sticker shock when your monthly invoice shows up with the added shipping charges, so you will need to be mindful of that.
The biggest difference in moving from PayPal to eBay for my payment processing is the new fee structure. The promotional material for managed payments states that most sellers will save money over PayPal, but until one was in it and using it, you would have no way to know for sure.
The new fee structure varies drastically from the old one, making it harder to determine what percentage of fees each item will be charged. Some items, such as men’s and women’s shoes that sell for over $100, are free of any final value fees, while those selling for under $100 will cost you a 12.35% final value fee.
Most final value fees will fall between 5.85% on the low end for guitars and 14.35% on the high end for most media related items, such as books, DVDs, CDs, and records.
I would recommend everyone looking over eBay’s “Store selling fees for managed payments sellers” page very closely, which can be found here.
My business is saving a considerable amount over what I used to pay when PayPal processed my payments. And not just from the final value fees I pay, but also from the large increases of free listings eBay added for those in managed payments. I am now given 50,000 more free listings a month than prior to joining managed payments. I have tens of thousands of active listings which I no longer have to pay for, which saves my business over $1,000 a month in extra listings fees, alone.
Finding and printing expense reports is fairly easy, but eBay does have things titled differently in different spots, which can confuse some sellers. With some tabs on eBay, such as the Statement tab in Seller Hub, what you actually get when you download that file is a report titled “Financial Statement,” though it is more of a reconciliation report more than anything else.
Under managed payments, eBay mails out a nearly identical third party payment form (1099-K) that PayPal does, so there were no surprises at the end of the year. I simply go to my Orders tab in the Hub and select the date range I am looking for, and then download a CSV (comma-separated values) format File. A CSV file can be opened and used in Microsoft Excel, Google Docs, and most other office spreadsheet software. This report will have all of your sales for the selected date range, including the total sale value, item cost, postage paid, and any sales tax that was collected.
I also download my invoices from the Payments tab in Seller Hub and pull my store subscription fees, final value fees, and international standard delivery fees from them.
One last report everyone should also download is the Financial Statement, which can also be found on the Payments tab, and is only for sales under managed payments. This last report is what I would call a reconciliation report similar to what PayPal has for their 1099-K form. It has all claims, refunds, chargeback disputes, and adjustments on it.
Between these three forms, you should have everything you need to handle your taxes, whether you are doing them yourself or paying an accountant to do it for you. I have done my own business taxes before, but these days I use an accountant, and I would highly recommend most full time resellers doing the same.
Even though eBay’s roll out of managed payments was not the best, overall, the transition has been smooth. It has saved my business a great deal of money, and it has also offered far more opportunities to sell items to more potential buyers through new payment options, such as Apple Pay and Google Pay.
So far so good!
You can find more information about Managed Payments on eBay.com.