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

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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.

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Readers Comments

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: Marie

Wed Oct 3 16:32:09 2018

Sadly there are those that feel that the seller is always the victim.  Even when they are informed about certain limitations.  It is always big bad Ebay's fault no matter what.  Now that DOESN'T absolve Ebay of the hot mess this payment program is.  There are more problems that were originally or subsequently announced.  And it is Ebay that needs to fix this.  It is completely their responsibility.  But on the flip side of that, there are SOME sellers that if they had read, researched and learn about what joining this initial launch was all about, they most likely would not have volunteered.  

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

by: Toledo Maude This user has validated their user name.

Wed Oct 3 17:08:59 2018

Sadly, this reminds of 2012 when there first reports of sellers losing their discounts and eventually rudely being shown eBay's backdoor losing their eBay business.  

Then it happened to me as I smugly thought the goons would never come for this top rated eBay seller of many years.

Now, I read the haughty snotty remarks of sellers who think they are too smart for the next eBay disaster around the corner.  They are coming for you...

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: RKTOYS

Wed Oct 3 17:44:16 2018

It's never eBay's fault, is it?  Might surprise you to know it's not a sin to believe false witness or allow yourself to be stolen from.

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 20:36:33 2018

"Sadly there are those that feel that the seller is always the victim.  Even when they are informed about certain limitations.  It is always big bad Ebay's fault no matter what."

Welll about that .... "Besides the shooting Mrs Lincoln - how was the rest of the play?"

On eBay the seller IS always the victim - if not - please point out a few instances where eBay policy changes have HELPED sellers?

1) you MUST mean the %10 unwarranted VIG on shipping right?
2) you MUST mean the "do it our way or we will hide you" attitude that eBay inflicts on its sellers?
3) you must mean the FORCED returns issue? 'cause (eBays own words) ... they are "just a venue" - right?

Please dont point me to GSP, as the program changed 10x since its inception. From the destruction of goods, to the hijacked prices, to the absolution of what the seller will be responsible via SNAD - please dont tell me how its been a BOON for sellers. Its a hand grenade waiting to go off. Sell something (GSP or not) and some guy in some country can do WHAT EVER they please - and you are still at fault - %100 BS.

4) maybe loosing sellers pictures is a POSITIVE thing (frees up server space on their DEC PDP10s I guess)?

We all can go on - but the point has been made.

Its not a small sellers fault that they dont know what each word of the TOS (both) says. Do you read every word of every EULA you agree to ? Didi you read the Microsoft one? How about the Adobe one? Googles? Yahoos? I think not.

Yes sellers need to be aware - and eBay AND Paypal should have said something.

After all the current Paypal jerk is an EX eBay jerk - damn it they seem to multiply.

Reverting sellers who experience issues back to their old system is a KEY STROKE not open heart surgery.

Sellers shouldnt be guinea pigs for the two JERKS battles.

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

by: Tiffee Jasso This user has validated their user name.

Wed Oct 3 21:57:54 2018

Paypal needs to make its own seller market place. It has the buyers, the money and the knowledge to do that.  

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

by: Scotty This user has validated their user name.

Wed Oct 3 23:50:02 2018

Someone please tell me....how on earth is this going to benefit eBay?
They will have drastically reduced sales (all customers use Paypal per their own requirements).
It literally is starting from scratch....it's like a start-up company with this move.  If you have no way for customers to pay (yes, I understand the new payment processor, but I know no one who uses this service or has heard of it), how do you generate revenue (besides the new enacted ''penalties'', etc.)
This will put everyone out of business and/or ''reset'' everyone to the first day eBay went live.
Yes...maybe at some point, sellers will pay ''less'' fees on transactions. But, as it stands right now and for the foreseeable future, of course they will pay less fees because their sales will go to ZERO.
They do not have the capability to roll this out.

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: Marie

Thu Oct 4 02:16:28 2018

"Someone please tell me....how on earth is this going to benefit eBay?"  Apparently Ebay is encouraging those in MP with PP loans to refi them with Ebay/Square.  So that could be the answer.

https://www.cnbc.com/2018/07/24/square-partners-with-eb
ay-to-expand-small-business-lending.html

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: RKTOYS

Thu Oct 4 08:06:39 2018

If PayPal starts up a marketplace and the requirements aren't too onerous, I can see moving my listings over there, at least in the short term once Mangled Payments is foisted on everybody.

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: iheartjacksparrow

Thu Oct 4 10:49:42 2018

Scotty asks: "[H]ow on earth is this going to benefit eBay?"

You have to realize that everything eBay does results in more money for eBay and less for their sellers. Once eBay is in control of every buyer payment, they can change their TOS (without notice to anyone like they did with the opt out clause) to hold a seller's money for extended periods (because the buyer has to be happy with their purchase), or charge higher fees (because they can), or add penalties (too many SNAD claims from unhappy buyers), or pay a refund to any buyer they feel like (liar buyers are little snowflakes and need free items), or any other despicable thing they wish to do.

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: FidoMaster

Thu Oct 4 12:08:31 2018

''How on earth is this going to benefit eBay?''
~~~~~~~~~~~~~~~~~

eBay will spin the benefits to it's sellers (eBay's true primary customers) and  buyers (eBay's customers'-customer) with typical marketing PR spin of things like, ''lowering payment-processing costs our sellers and greater options for buyers.''

Internally of course eBay's looking to reduce costs, gain efficiencies, and earn interest on the float amongst some of the most obvious benefits to eBay.

There's another *significant* strategic goal where MP serves as a lynchpin for eBay, and that's in (re)attempting to penetrate the China market with a combination of Managed Payments + Mobile + the massive Fujian ecommerce industrial hub eBay is pumping hundreds of millions of dollars into (I don't actually know the amount, but until eBay discloses it I'm saying ''hundreds of millions'').

eBay is already the largest exporter of Chinese good worldwide, and they are doubling-down on this bet. After previously failing in China with Eachnet, this time they want the cross-border trade both into-and out of China and they believe moble and the processor-agnostic benefits of Adyen will help them get there and be able to compete with Alipay, WeChat, and Tencent in China for both their merchant-sellers as well as new generation of buyers that never have used a computer, but use their mobile devices as one.

2 years ago iReasearch  reported that China led the mobile payments industry globally with over $5.5 TRILLION in transactions. eBay hopes it can leverage it's processor-neutral managed payments platform (in conjunction with acquisitions like Japan's Qoo10) to turn the dial up to ''11'' with moving cross-border commerce into and out of China into Japan, Australia and of course the US and EU.

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

by: eBay Shill Buster This user has validated their user name.

Thu Oct 4 13:56:12 2018

Dave I have no idea where you get the idea that eBay is the larget exporter of goods, you must have picked that up from the PR guy, but in no way is a tiny company like eBay the largest exporter of goods from China, they would not make 10% of the volume of Wal-Mart who has been the largest for decades, Home Depot also has container ports on the east and west coasts and is a giant importer.

You trying to tell me that eBay and their ePackets small sellers surpass Walmart and Home Depot?

Where is the data?



For several years, Wal-Mart has been the single largest U.S. importer of Chinese consumer goods, surpassing the trade volume of entire countries, such as Germany and Russia. Global sourcing is now fully integrated into the company's operations -- giving Wal-Mart enormous leverage worldwide. Foreign products account for nearly all of Wal-Mart's trumpeted low opening price point goods.


 https://www.pbs.org/wgbh/pages/frontline/shows/walmart/secrets/w
mchina.html

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: bitbybit

Thu Oct 4 14:20:47 2018


Sucks in the Middle

I got the feeling that something ain't right,
They do things out of spite
Ebay Clowns to the left of me,
Paypal Jokers to the right, here I am,
Stuck in the middle of these two

Yes I'm stuck in the middle of these two,
And I'm wondering what it is I should do,

Ebay Clowns to the left of me, Paypal Jokers to the right,
Here I am, stuck in the middle of these two

Well I started out with nothing,
Built this business from scratch
And your friends, they all come crawlin,
Slap you on the back and say,
Please, please tell me more about eBay

Trying to make some sense of it all,
But I can see it makes no sense at all
Is it cool to go to sleep on the floor?
Well, I don't think I can take anymore
Ebay Clowns to the left of me, Paypal Jokers to the right
Here I am, stuck in the middle of these feuding two.

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

by: eBay Shill Buster This user has validated their user name.

Thu Oct 4 14:33:31 2018

LOL, good one, if we did not laugh we would have to cry, Devin has picked fights with Bezos and Donahoe at the same time, dudes days are numbered.

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: FidoMaster

Thu Oct 4 19:43:37 2018

ESB, it's a fair question about what metric exactly Wenig used to make that claim, and one perhaps someone should ask him to clarify (like in the earnings call). Aside from my typos and run-on sentence, if I could rewrite I'd say "claims", as he made this statement earlier this year during the Goldman Sachs tech conference interview.

I did look at the investor site to see if a transcript or recording was available, but interestingly it is no longer there.

So with that said, I'll speculate a bit further. It’s possible that with the right criteria, “biggest” might well be true. Keep in mind it’s likely Wenig is gauging GMV as the metric, not sales. Also, “worldwide” obviously suggests China CB exports to everywhere, and not solely US imports. It’s also possible, accurate or not, someone pointed out to him it was a really, really, bad soundbite to have floating around.

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

by: comments This user has validated their user name.

Fri Oct 5 02:17:09 2018

Given all the unknowns with the payment I have decided not to take any paypal working capital loans though out the new payments roll out. I saw this as a potential problem months ago and can't believe others didn't.

This is extremely unfortunate because working capital loans are an incredibly good value and when used responsibly can really elevate your business. I credit paypal big time with a LOT of success I had resulting from working capital.

I REALLY like when a partner company like ebay or paypal uses new products and features to entice the consumer to pay more money to them for greater service/profit as opposed to fee increases.

I understand that ebay and paypal are both in the business of making money from sales I generate with their traffic and payment processing. But they should still earn though innovation instead of the "you need us more then we need you" fee increase mentality..

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.

Fri Oct 5 08:05:34 2018

I know I pointed it out in my earlier post... There's nothing wrong with PayPal Working Capital. You just go in and manually submit a payment to stay "in compliance".

Biggest downside is probably that PayPal can no longer see your real sales #'s. And they can't butt-into your transactions. So, going forward, their algorithm isn't going to hand out nearly as many loans. In fact, I see PayPal becoming almost irrelevant outside of eBay. My website accepts PayPal (and Amazon Pay, Apple Pay). But most people tend to pay via Stripe (direct credit card entry). It's good to have those options available to the consumer. But I don't see much activity there.

If eBay wanted to be open and welcoming to consumers, they'd quit being sissy isolationists, and add all of those options. Buyers just want to buy. They want it to be easy. Ebay is not in the alpha position. They should quit feuding, assimilate, and get back to making money via seller fees. As-is, they're just collapsing themselves. And they come across as desperate.

Calling eBay "sissies" is definitely my new thing. I'd call their current executive decisions that of "hard-power beta sissies" to be exact. They're a bunch of feuding jerks, with the livelihoods of tens-of-thousands of small businesses resting on their shoulders. Unlike their access to billions of public dollars in their toy chest, this stuff is very real and very serious to business owner/operators who rely on eBay to access customers. I saw a lot of people lose everything they had in 2011 and 2012 after their accounts were cut off. It's not a game to owner/operators.

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.

Fri Oct 5 12:57:03 2018

I'm reading a headline, "EBay Demands Amazon Reveal Sales Haul From Alleged Poaching". You guys can Google it. I know that links to paste well in here. Maybe Ina will report on it?

What is eBay doing? These people are unbearably dumb. They think that Amazon staff is messaging eBayers and requesting that they flip to Amazon? So incredibly dumb.

My guess is that eBay is desperate, and looking for some petty litigation settlement to bring in some revenue. Whoever approved a cease and desist letter must be the dumbest person in eCommerce. That's so out of touch and paranoid. You guys have talked about eBay's demise for a long long time. I think this might be it!

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

by: quirkyantiques This user has validated their user name.

Fri Oct 5 14:29:59 2018

Marie is correct. I had no intention of enrolling but I read all the fine print anyway. I was fully aware that PP would not be able to be accepted on sellers listings that volunteered for managed payments. I was also aware that GSP woud not be available. I know for a FACT I read that opting out would not be an option. As usual sellers have presumed that Ebay "has their back" and not bothered to be skeptical about ANYTHING Ebay is trying to push at them. They have no one to blame but themselves for signing up.

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: Marie

Fri Oct 5 14:57:19 2018

@quirkyantiques

Thank you for posting this.  Sometimes all we read on this threads is how horrible Ebay is and how the seller is always the victim, never taking responsibility for their own actions.  While I do think this program in its current state is a VERY bad program, I knew all of this going into it which is why I did not opt in.

I had originally thought I would opt into this program until I looked at it closer and read what was presented to me.  After that I knew this was not a good fit for me nor is it for many sellers.

Ebay is still at fault for a poorly implemented launch of this program, but things were not kept secret from sellers.  Some just chose not to read the information given them.

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

by: ebayout This user has validated their user name.

Fri Oct 5 19:02:56 2018

@Marie
You know...we know...ebay knows...90% of written info is NOT read 100% of the time.

KNOWING THAT...ebay should have posted in a 40pt font the 3 most significant consequences of signing on for MP, and the deadline for opting out (if still available)...RIGHT ABOVE the "I agree" statement.

Real partners don't screw each other with a cursory "you should have known/should have read the fine print" excuse.

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