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

by: mcposty This user has validated their user name.

Fri Oct 5 22:00:10 2018

You can opt out. Cancel your accpunt..start a new one. Instant boost in views and no managed payments.

At any rate none of this matters..as sales plummet with the new system and when it goes live for everyone sales will tank for a lot of people.

I dont ever defend ebay even if it isnt there fault..somewhere along the process..they are at fault for a lot more thN not so by all standards and practices only idiots believe ebay in anything they say.

Defects will never be held against you!

Late shipments is only a metric never to be held against you!!

As long as you fix the problem returns won't be held against you!!

Complete LIARS and its shameful anyone defends anything they do.

Destroyed thousands upon tboysands of businesses i do t care if they put something in their million word eulas..they ARE ALWAYS at fault and NEVER deserve a si gle kudos. End of story.

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

Sat Oct 6 02:42:13 2018

@ebayout

That is no excuse whatsoever.  If you are going to volunteer your business for something as important as a new payment system, it is YOUR responsibility to read and learn everything you can about it BEFORE you allow yourself to enter into an agreement that they TOLD you, you will not be able to opt out of.

We need to take responsibility for our own actions or lack of action as it may be.  But again that does not excuse Ebay from not having the process programmed better than it currently is.  That is completely Ebay issues to resolve.

As for the sellers that do as you described, blaming Ebay for not knowing what they were getting into is just silly.  We are suppose to be adults here.  We know to read contracts before signing on the dotted line.  To do anything less is irresponsible.

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.

Sat Oct 6 09:35:16 2018

ebay..."We don't need no stinkin' Plan B".

Does ebay EVER prepare for failure?
ebay is the personification of Murphy's Law.
Everybody kows it but them.

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.

Sat Oct 6 12:40:58 2018

Marie, you do realize that all sellers are going to be forced into eBay Payments and Seller Hub right?

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.

Sat Oct 6 13:14:16 2018

Instead of looking for additional sales peope/stock clerks, ebay decides to decrease the salaries of it's current sales people/stock clerks by charging more for their "benefit" packages.

If you think that's a win-win, I have a bridge for sale.

...and oh...if one thinks of that munificent .002%+30 cents/item as an "increase",
it fast becomes a loss after the 1st lost sale for not not having PP.

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

Sat Oct 6 13:38:31 2018

@eBay Shill Buster

Yes I do, but what is your point?  Specifically to the MP program, that isn't happening today, tomorrow, next month or even next year.  While more sellers will enter the program sometime later next year, it still will not be mandatory until 2021+.  Lots of time to add PP and work out other issues that are plaguing the system right now.

Don't get me wrong, I see this as one of the most important issues facing sellers on Ebay.  How we get payment is critical to the ability to function and grow our businesses.  Am I complete up in arms as many are here, no.  Most of us are not affected by the launch of this program.  There will be changes to the program, lots of them between now and when more sellers enter.  And most likely even more changes after that.

While it is very important that all of us stay current and up to date on any and all things related to MP, it is way too early IMHO to call it a disaster, failure or the downfall of Ebay.  Everything new that upsets members is said to be the downfall of Ebay by many for many years now.  None of which has been true as history shows us.  

This is merely a change that many do not like and for good reason, but it isn't going away.  It will change and hopefully those changes will be improvements.  Only time will tell.

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.

Sat Oct 6 13:45:20 2018

Yes it is true Marie, eBay is a dead venue and getting worse by the day, it is run by the 3 Stooges of eBay, Cutler who is supposedly in charge of the marketplace has no idea of what to do.

Cutler can't even run simple things like listing promotions properly to keep sellers listing new items and unsold listings active on eBay costing the company billions in sales, the dude is such a moron he even raised the listing fee to 35 cents causing less listings to be created.

When your company is run by highly incompetent executives like Devin Wenig, Cut Throat Cutler and the Wall Street Whisperer CFO who will tell any blatant lie he can think of to investors on why the company is not performing you are sailing on the Titanic.

Smart sellers avoid these morons and all their programs, this means the move to other venues and are not going down with the coward captains.

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.

Sat Oct 6 14:11:20 2018

ebay has shown great propensity for tripping over it's feet, so making any positive 3 year projections is...well...foolish.
Based on the current stock price trend and the volume of seller howling, it's easier to predict the next 3-6 months. It ain't pretty.
A buy-out is more than likely after the 3rd & 4th quarter results. Any new owner would have to have mush for brains if they keep MP in favor of PP.

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

Sat Oct 6 14:12:18 2018

@shill

I get it that this is your opinion "...eBay is a dead venue and getting worse by the day..." and for you it may be, but for others it isn't.  Even for some of those that post here on a regular basis about how evil Ebay is.  Because if what you say were to be true, there would be no reason for them to continue to sell on Ebay.

Those that post here are a mixture of ex Ebay sellers and current Ebay sellers.

"Smart sellers avoid these morons and all their programs,this means the move to other venues and are not going down with the coward captains."  Again, your opinion.  I don't hold that same viewpoint on my fellow sellers here or elsewhere. I think there are very smart people that post here that continue to sell on Ebay, I may have disagreements with them from time to time, but I still think they are smart nonetheless.  I get it that you don't, but we will just have to differ on that point.  

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.

Sat Oct 6 14:33:45 2018

eBay has been going down the tubes for years Marie, Devin has hastened the inevitable Yahoo like destruction of the company.

It is over, if you want to sail into impending financial destruction by putting your future in the hands of the 3 Stooges of eBay, there is your prerogative.  

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