Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Feb 25 2015 22:10:47

eBay Not Allowed to Compete with PayPal after Breakup

By: Ina Steiner

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In a filing with the SEC on Wednesday, PayPal revealed more details about the agreements it will enter into with eBay once the two split. 

eBay and PayPal will be two separate companies, with two separate stocks, but the operating agreement ties them at the hip - key for sellers: eBay must continue to offer PayPal and the two companies can't compete with each other.

The main operating agreement will be in effect for 5 years and can be renewed thereafter on an annual basis.

Under the agreement, PayPal will provide payment processing and credit services to eBay.com and eBay Marketplaces customers, but the agreement won't apply to other eBay properties, such as StubHub, eBay Enterprise, Magento, Classifieds, eBay Motors, Shopping.com, Gmarket, Half.com or eBay Local. (eBay could already be planning to sell those properties; it already said it was looking to split off eBay Enterprise in some fashion.)

The operating agreement will require PayPal to offer eBay merchants pricing in line with rates charged to comparable merchants, as defined in the agreement. "Therefore, the PayPal rates for eBay merchants will remain largely consistent with today's pricing relationship."

And clearly PayPal is concerned that eBay could do what Etsy and other marketplaces have done - offer a solution in which shoppers pay the marketplace, which then pays the seller (i.e., Etsy Direct Checkout): the operating agreement prohibits eBay from declaring itself as the single merchant of record for transactions.

There's one exception to that restriction: if PayPal is acquired "by certain specified companies." Those companies aren't named in Wednesday's filing, but it's sure to include eBay competitors.

eBay will also be prohibited from competing with PayPal - and vice versa. 

"Subject to certain exceptions, eBay and its controlled affiliates will be prohibited from directly or indirectly engaging in the business of marketing, distributing, promoting or selling its own proprietary payment solutions for use on the eBay Covered Properties, and PayPal and its controlled affiliates will be prohibited from directly or indirectly engaging in the business of marketing, distributing, promoting or selling its own proprietary marketplace offerings. These restrictions will continue for the term of the operating agreement."

So, are eBay sellers happy knowing they will be able to continue to use PayPal, or were they hoping the breakup would give them more options when it comes to payment services? Let us know what you think.

There's more in Thursday's Newsflash here.




Comments (66) | Leave Comment | Permalink

Readers Comments

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: pace306 This user has validated their user name.

Wed Feb 25 22:21:26 2015

So in ENGLISH, ence again eBays sellers will get screwed ....  

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: iheartjacksparrow

Wed Feb 25 22:29:13 2015

It doesn't sound like anything will be changing. PayPal will continue to be the only payment processor that most small and medium sellers will be able to accept. But will eBay still exist five years from now?

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Philip Cohen
Web Site

Wed Feb 25 22:56:52 2015

Did anyone really think that the "spin off" was ever going to be other than in "name only" ...

PayPal would take an enormous hit if it didn't have the eBay business by the throat; but what does it matter, eBay is well on its way to the sewage farm; they should both arrive at about the same time ...

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid ... http://bit.ly/11F2eas

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Ric

Wed Feb 25 23:03:38 2015

Biggest concern:  ....
The operating agreement will require PayPal to offer eBay merchants pricing in line with rates charged to comparable merchants, as defined in the agreement. ''Therefore, the PayPal rates for eBay merchants will remain largely consistent with today's pricing relationship.''

''Largely consistent with today's pricing relationship'' would seem to leave wiggle room for PayPal to increase fees on eBay sellers without violating the agreement.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Unicorns and Rainbows

Wed Feb 25 23:52:53 2015

That's exactly what we all expected.  No other viable payment processor will be allowed, and the buyers who hate PayPal and won't use eBay as a result, right along with the sellers who won't use PayPal, will continue to avoid using eBay.

It's basically an agreement to keep PayPal from losing half its revenue at the expense of eBay and their shareholders.  

As a result, my transactions involving any significant sums of money will continue to avoid the PayBay sphere of influence by using other venues where I am not forced to do business with "the bank that's not a bank" and their "180 days same as not paid" program.  

 

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: gizmo This user has validated their user name.

Thu Feb 26 01:03:59 2015

Paypig has grown bigger than deadbay. Taxes could be the real reason these two companys "need" to split. Higher tax bracket can break you. Split the two , taxes may drop.

Paypig is accepted at a lot of places , deadbay is not. They do not meld good anymore.

They will still remain their mafia style muscle.

Catch 22 comes to mind!

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: happyharry This user has validated their user name.

Thu Feb 26 01:07:55 2015

so really ebay sellers after the breakup could ditch paypal and offer AMAZON payments as an option

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Ming the Merciless

Thu Feb 26 01:10:44 2015

I expected nothing less than an agreement which is anti competitive and suggests price fixing.

Yes, the fix is in and The Ho's heavy handed, tortured b school vocabulary is readily discernible throughout this convoluted statement.

This corporate Ho will land on both feet with a little help from his friends while thousands of sellers he screwed end up in bankruptcy or divorce court.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: comet This user has validated their user name.

Thu Feb 26 01:14:47 2015

I doubt that there is going to be some sort of open=ended payments allowed by ebay--they are probably NOT going to suddenly allow their sellers to accept Amazon or any OTHER non-ebay friendly payment.

They will find--or have already found--some wya to keep PP the SOLE "acceptable"  payment source--after all--all those stock holders out there are depending on this.

And I can hear it now--"We can't allow other non-trusted payment systems!  The buyers might not like it!"

Same shinola different day

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: laurengrace

Thu Feb 26 01:59:53 2015

Anti trust laws should never have allowed eBay to buy Paypal in the first place. There is an opportunity for the courts to get involved again at this point I think,and undo the wrong that was done. I hope with all my heart that this happens. I do have little faith in that,as corruption and greed is the norm any more, and everybody seems to have a price they will accept to simply look the other way,but I still hope for some justice here. Payment choices should be the sellers decision,since it is the sellers merchandise.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Marie

Thu Feb 26 02:22:33 2015

While some may not like it, it makes good business sense for both Ebay and PP to do this.  Giving both companies time to grow and develop what they need for the long term.  

The expense to Ebay just to do all the reprograming and set up of their own payment processor would be and enormous understaking.  

So during this 5 year term they have time to analyze what the real affects are of the spin off, then make an informed decision on how to proceed.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: laurengrace

Thu Feb 26 02:31:15 2015

@Marie
EBay already had their own payment system back in the early days. It was called bill point. It failed miserably. Paypal was also allowed. That was before eBay owned it and they went gustapo. In the early days,we could use paypal,bill point,western union,our own merchant account,check or money order or other online payment systems at that time. It was a free country back then.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Marie

Thu Feb 26 02:41:51 2015

@laurengrace

Yes they did, I was around for all that too, but that has nothing to do with this spin off.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: laurengrace

Thu Feb 26 02:58:37 2015

@Marie
How does it not? If they are 2 separate companies as they are leading all to believe,they should act as such and not tie the others hands,although most of us know eBay as we knew it is through anyway. It will be sold to the highest bidder,and it,s not worth much now. They are a business built off the hard work of the sellers,and instead of treating their customers (The sellers) with respect
They slap them every chance they get.I have never seen any business tray their paying customers in this manner. I have ringside seat watching them go down down down glub glub glub

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Marie

Thu Feb 26 03:10:00 2015

@laurengrace

You were talking about something that happened a decade ago.  It will play no part in the spin off.  That is what I responded to, nothing more.

You were talking about Bill Point & other forms of payment methods offered years ago.  And that is what I responded to.

******************

As to your Non compete clauses are not an unusual occurance for a situation like this.  Because it is Ebay and PP involved some act as if this is an unusual thing, but it isn't.

AS to the longevity of Ebay without PP.  Only time will tell.  

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: Leesantiques This user has validated their user name.

Thu Feb 26 04:49:18 2015

Not clear to me from this article is a key point: Will Ebay be allowed to offer sellers the opportunity to use other payment processors?  Will sellers now be (finally!) able to openly go back to accepting checks, money orders, and cash?

I can understand the non-compete clause.  That sounds standard.  But sellers being offered the opportunity to use whatever payment options we choose should be allowed!

I live in hope......

Lee

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: RCL This user has validated their user name.

Thu Feb 26 05:53:23 2015

It sounds like eBay may not offer other payment services as they compete with PayPal

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

by: RCL This user has validated their user name.

Thu Feb 26 05:54:01 2015

PS the implementation of these clauses can result in an unlawful restraint of trade

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: Rexford

Thu Feb 26 07:30:27 2015

Knowing these companies as I have come to know them, I would not have expected anything else.

The Great Charter created by JD and his nemesis Carl.

Perminate Link for eBay Not Allowed to Compete with PayPal after Breakup   eBay Not Allowed to Compete with PayPal after Breakup

This user has validated their user name. by: laurengrace

Thu Feb 26 08:05:29 2015

EBay code of ethics:
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