Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Oct 2 2018 16:09:55

Sellers Casualties as War Erupts between eBay and PayPal

By: Ina Steiner

Sponsored Link

When eBay decided to split with PayPal, it all sounded so civilized with a 5-year operating agreement to ease the transition. Three years later, it's erupting into war, with eBay sellers the casualties. 

(NOTE: we've update this story below.)

Today, PayPal sent a stern warning to eBay sellers advising them they might be out of compliance with the terms of their PayPal Working Capital loans if they had opted into the initial phase of eBay managed payments that began rolling out last Monday.

PayPal informed sellers, "We've been receiving questions from our PayPal Working Capital customers regarding how eBay's new agreement with another payment processor may affect their loan. We would like to provide a quick overview of key terms of your PayPal Working Capital loan to help you navigate."

It included the following:

>>>
In the Terms and Conditions you agreed to:

1) Maintain PayPal as a preferred payment method set forth on Business' website and/or checkout options in a no less favorable position than as provided on the date of this Agreement;

2) Not take any action to discourage PayPal use or permit any event to occur which could have an adverse effect on the acceptance, authorization or use of PayPal by purchasers of the Business' products and/or services or allow any event to occur that could cause a diversion of any of the Business' PayPal Sales Proceeds from PayPal to any other entity;

Detailed Terms and Conditions of your PayPal Working Capital loan can be found at paypal.com/workingcapital/terms
<<<

You can't exactly blame PayPal, given the way Working Capital loans work - if sellers aren't making any sales through PayPal, it's not recouping its money.

One huge component of the mess some sellers are now facing is whether eBay communicated clearly to sellers about the limitations of the managed payments rollout when it extended invitations in the summer. Many sellers said eBay did not inform them that their buyers would not be able to use PayPal to pay for their purchases through managed programs until next summer.

We sent email inquiries to eBay and PayPal to find out what sellers can do at this point - and to find out how in the world eBay came to include sellers with Working Capital loans into its managed payments program. 

NOTE 10/4/18: PayPal updated its response to us, we've edited the following paragraph to be more precise about PayPal Working Capital, the gist of its statement hasn't changed.

A PayPal spokesperson explained that PayPal Working Capital is a business loan issued by WebBank that provides financing to approved merchants based primarily on their PayPal Business account history. "The program uses PayPal proprietary data to assess risk without a credit bureau score. So it makes sense that merchants have to use our payments platform in order to continue to use our Working Capital program. You can read more here."

She referred us to eBay for questions about eBay managed payments.

We also asked eBay if it's true that eBay employees are advising sellers to get an eBay/Square loan to pay off their PayPal Working Capital loans; it has yet to respond to this afternoon's inquiry. eBay had raised eyebrows when it did its deal with Square rather than PayPal.

We thought eBay managed payments was messy, but this brings it to another level, with sellers bearing the brunt of this new war.

Update 10/2/18: An eBay spokesperson got back to us this evening with the following statement:

With respect to PayPal Working Capital, we have no visibility into whether sellers do or do not have PayPal Working Capital relationships and cannot advise them on the terms of their relationships with PayPal.

Additionally, we did advise sellers opting into managed payments that PayPal would not be available as a form of payment until Summer 2019. Specifically, we disclosed this:

- On the Managed Payments landing page (which all sellers land on prior to sign up);
- A number of times in the "Sell and Get Paid" section of our Managed Payments page on ebay.com, which was shared with all sellers who were invited to participate in the initial rollout of managed payments;
- In our payments FAQs posted to our Seller Center;
- In our Managed Payments Help article online; and
- In our direct engagements with sellers considering opting into managed payments.

Here are two questions we asked today that remain unanswered:

- Are you allowing sellers to opt out? If so, what are the instructions on how to do so?

- Are eBay employees advising sellers to get an eBay/Square loan to pay off their PayPal Working Capital loans? 

Note that we had previously asked eBay if it had informed sellers of *all* of the limitations when inviting sellers to participate in managed payments. And we had also asked on September 30th:

- Is there any way a seller can participate in managed payments for some listings but not all - using the same User ID? or on a separate account?

- What's eBay's stance on informing buyers about why there is an increase in the number of listings that do not accept PayPal?

- Is there a publicly available list of categories that are excluded? If not, could you send me the list?

- Why did eBay change the terms of use on Wednesday to remove the paragraph about opting out?

- Are sellers allowed to opt out? If so, how? There are sellers reporting they are unable to opt out of the program.

eBay has been updating the FAQs since we've been checking in on the page (without notating the changes and additions). Here's the answer to the "opt out" question:

After I register for managed payments, can I opt out?
No. We understand that every situation is unique, and have developed a path for sellers to flag any issues or raise concerns with our Customer Support team to determine best path forward for their business.

Comments (70) | Leave Comment | Permalink
Readers Comments

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Troy Stiffler This user has validated their user name.

Tue Oct 2 20:43:42 2018

You’re allowed to simply make the minimum payments manually. It’s not hard. Having a hard time seeing a problem with this.

If anything it’s good. It allows users to make the absolute minimum payment. And you don’t pay an APR.  So...

Still feel bad for those seeing a dip in sales. Every sale is precious to a small business. This isn’t a game. Most of us don’t have big savings or external income. Elitist Silicon Valley execs don’t understand how real people live. It’s either you run an eBay based company or go work bagging groceries or whatever (not that there is anything wrong with that).  

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Dburn This user has validated their user name.

Tue Oct 2 23:32:53 2018

If they are pushing Square loans to Pay off Paypal loans it could cost a seller a load of money as the finance charge for the Paypal loan in paid up front. Chances are most are paying principle only. If they refinance with Square to pay off the Paypal loan the costs be like getting worked on with a jack hammer. If the borrower  doesn't understand finance they could be handing  all their Q4/Q1 profits plus to Square/EBay as I 'm reasonably certain eBay gets a referral fee.

They also have to endure the likely misery of a pretty big drop in sales. Could be some BK filings over this.  

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: val2525 This user has validated their user name.

Tue Oct 2 23:54:57 2018

Marie and eBay are correct.  eBay DID warn sellers that sellers could not accept PP payments while in the beta test. Too many sellers don't read the boards, the announcements, the eBay emails or apparently the fine print.  If you have a loan, it's YOUR responsibility to get it paid, not eBay's.  I do think though that eBay and PP could have better coordinated this issue.  It sounds like eBay decided to use it as an opportunity to flip some PP loans over to eBay/Square loans.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: thriftyattireandstuff This user has validated their user name.

Wed Oct 3 00:02:58 2018

Note that eBay's option does involve a credit check. I clicked their promotional email to see and it was right there. Not an option for me based on personal credit limitations. Fortunately I'm sourcing well and sales are way up so I won't need another PayPal loan even though I am not involved in the managed payments. I can use that % PayPal is currently taking out as capital on it's own.

As far as anyone decieving anyone. Anyone who has any common sense would know this would affect their loan. I do not feel sorry for sellers at all who got themselves in the pickle.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: shut1968 This user has validated their user name.

Wed Oct 3 00:36:51 2018

@maxmad

Quote: I am still convinced this whole ebay payment plan, is because ebay did not get the deal they wanted from paypal.

No, it's because:
A: They see all the "free money" Amazon (and PayPal) get by collecting interest on millions of dollars daily.

B: They can control sellers even more by threatening to hold funds and payouts for whatever reasons they choose.

No other reasons.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: smallstuff This user has validated their user name.

Wed Oct 3 00:49:59 2018

I don't understand how eBay management thinks.  Most large companies focus on continuous improvement or at least improvement over time.  Most also understand the importance of clear communications and documenting changes and change dates.  There are exceptions, but this is clearly the worst I have ever seen -- with the exception of some that just acquire one company after another with no sense of a strategic plan.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: mcposty This user has validated their user name.

Wed Oct 3 02:17:48 2018

All these middle men venues like amazon ebsy etsy shoulf not be allowed to manage psyments nor dictate how a seller collects payments.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: maxmad This user has validated their user name.

Wed Oct 3 06:33:59 2018

What's the difference anyway,? EVERY EBAY seller that either have PayPal loans or use PayPal to purchase things WILL need to have a plan in place when eBay rolls their payments out in 2019, their PayPal accounts will never see another dime deposited in them from eBay sales, since eBay is only making deposits to bank accounts and NOT to PayPal



Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: maxmad This user has validated their user name.

Wed Oct 3 07:14:19 2018


@ shut1968

I agree with you, and ..............

That's basically what I'm saying by saying eBay did not get the deal they wanted from PayPal,

if they stayed with PayPal and wanted To start collecting and controlling all the money, into one big PayPal account and get a better deal on fees, it would have been like stealing millions of PayPal accounts from their customers, , PayPal probably told them to go to hell, it might not even be legal

There's no winners, PayPal / eBay/ Sellers will all be hurt from eBay's greed
but I believe PayPal will most likely be the biggest looser, as millions of PayPal accounts will become obsolete., I'm sure they are pissed off, at what eBay has done. .

Something smells and there's more to this story

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Timbo This user has validated their user name.

Wed Oct 3 08:05:41 2018

eBay is one of the few public companies I know of where the top management is allowed to operate in a highly reckless and irresponsible manner with total impunity.
Don't we all wish we had a job where we could continually screw up and suffer no adverse consequences!
As I have repeatedly expressed on several posts over the last month:
"THE ROLLOUT OF MANAGED PAYMENTS BY EBAY WILL BE AN UNMITIGATED DISASTER!"
It didn't take a "rocket scientist" to figure that one out!

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Barbbie This user has validated their user name.

Wed Oct 3 08:54:19 2018

Wow, not sure why whoever has their working capital loan that they don't know they are not supposed to take any action  that would steer sales away from paypal. I took it seriously back when I had one and did not even offer any new payment processors on my own website. However, informing people to take out a loan from someone else when you have already pre-paid all your interest to paypal for that loan sounds like they think these sellers are double stupid and ill-informed.
The impacted sellers will be sent a quarterly email from paypal about how much they still owe on their loan for that time period and can pay up from there. No need to panic.
I found out this little gem when ebay cut my sales in half while I still had a loan. I won't get another for sure.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

This user has validated their user name. by: CanBrit

Wed Oct 3 09:46:37 2018

Interesting thread on the forums showing the initial terms of use for managed payments and the changed terms of use where they clearly remove the capability to opt out.

https://community.ebay.com/t5/Payments/THE-PROOF-YOU-NEED-TO-L
EGALLY-OPT-OUT-OF-EBAY-MANAGED-PAYMENTS/m-p/29012095

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: bb6 This user has validated their user name.

Wed Oct 3 09:55:39 2018

They did tell the sellers that they wouldn't be able to use paypal. I know some that opted in and they said they were told. So its on the person that borrowed the money to pay it back. You don't take a loan then go do something else just because thats what you want to do. You have to take responsiblity and pay back the loan or they come after you. No wonder so many people are in debt. Jeez, this should be commonsense!

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Snapped This user has validated their user name.

Wed Oct 3 10:08:49 2018

So, eBay's position on all this is effectively, caveat emptor.  You, dear customer, should have known what the 'negative' impacts would be before 'volunteering' for this debacle.

Typical sickening eBay hypocracy in play, considering how they compel their sellers to accept any and all transaction 'opt out' reasons - even those UNsubstantiated by facts - from every buyer now.

Perhaps some who might advocate the 'righteousness' of this latest take ploy respecting the accompanying seller disadvantage (no matter how 'few' may be impacted - what % is 'acceptable btw?) can chime in to justify THAT somehow?

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: glasspackaging This user has validated their user name.

Wed Oct 3 10:33:14 2018

no problem - we have had no sales on ebay in 30 days .... while amazon remains ok ....  we did not and will not opt in to their new processor .. though they are bombarding me about processing my website sales now - thanks EBAY ...  you gave them my business name and email..... get paid for that?  

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Patricia This user has validated their user name.

Wed Oct 3 13:09:07 2018

The big shots at eBay acting like spoiled brats once again...when does it stop?  Are they in the business of bullying their sellers and hurting their sales or are they in the business of helping sellers make those sales and eBay's commissions?????  They need to chose and stop the nonsense!

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: maxmad This user has validated their user name.

Wed Oct 3 13:09:07 2018

After I register for managed payments, can I opt out?

No. We understand that every situation is unique, and have developed a path for sellers to flag any issues or raise concerns with our Customer Support team to determine best path forward for their business.

Response by CS team,,,,,,,,,
Yes, I believe there is a Food Bank, two doors down from where you can file for Bankruptcy, located all on the same street as the unemployment office, is there anything else I can help you with.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: Whatever This user has validated their user name.

Wed Oct 3 13:30:00 2018

I actually have quite a bit of empathy for sellers who were duped into taking out loans to sell on ebay in the first place - was never a good business model. Way too much risk under the current circumstances.  Talked to a fellow seller the other day and we both realized that only the Chinese and sellers such as the 2 of us would soon be the only ones left on ebay. Why ? because both of us are sitting on huge PAID for inventory.  If I was just starting out and wanted to sell on ebay I'd never do it again. There is always going to be some innocent minded dreamer who is willing to drink the Koolaide believing they can create their own little piece of entrepreneurial success - that's how we got Trump remember? There is no quick money on ebay anymore - it's bump and grind and work your buttocks off. Taking out a loan to achieve  that craved success is a dream of our forefathers.

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: pace306 This user has validated their user name.

Wed Oct 3 15:04:40 2018

Sadly, there are those here that STILL blame the seller.

It was their fault for not reading all the fine print, they should have read each websites TOS/UA top to bottom, they should have requested copies of the agreements, meetings and BOD directives.

"You knew the job was dangerous when you took it" (Superchicken)(and Fred) reference - Google it!) ONLY GOES SO FAR.

Sellers were always treated like trash on eBay (since 2007) and these agreements and the fall out show that eBay hasnt changed its stripes ... at all.

Is a shame that sellers once again are in between DUMB and DUMBER

Perminate Link for Sellers Casualties as War Erupts between eBay and PayPal   Sellers Casualties as War Erupts between eBay and PayPal

by: indomama This user has validated their user name.

Wed Oct 3 16:21:29 2018

eBay have misled sellers by omitting important information.  It clearly states in your Working Capital Loan agreement that you can not remove or divert sales away from PayPal, and if you do your loan will be in default. Some people may not have read the agreement carefully, I did when I signed up for it, and therefore will not opt in to eBay managed payments.

I  have been wondering what would happen to my Pay Pal loan if it's not paid in full by the time they roll out managed payments to all.  My sales were brisk until April and then dropped dramatically with eBay's update. Have recovered a bit but still behind last year by about 20% so that is possible my loan  not be paid off by the time this happens.

BTW Square's capital loans are much more expensive than PayPal. I use Square in my brick & mortar  and always get invites, but find the rates very high compared to Pay Pal

This is what eBay tells you & I find it very vague:
What if I have an existing PayPal Working Capital loan?
You can still maintain your own PayPal accounts and continue to have access to the same PayPal features and products you use through PayPal today. Through our partnership with Square Capital, you'll also get access to small business loans from $500 up to $100,000. Learn more about Square Capital for eBay sellers.

Link to page:  https://pages.ebay.com/seller-center/service-and-payments/manage
d-payments-on-ebay.html#m22_tb_a1__20

Click to view more comments
1 2 3 4  [Next Page]


Login is required to post comments.
To sign in to leave a comment, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.