eBay struck a 5-year operating agreement with PayPal when the board broke up the companies in 2015, but a provision in the contract allows eBay more leeway beginning next year - and the biggest losers may be eBay sellers.
Speaking at a Wall Street conference on Tuesday, eBay Chief Financial Officer Scott Schenkel addressed a question about the provision which a Credit Suisse analyst described as giving eBay the ability to experiment with payments and become the merchant of record at the three-year mark, which would be July 2018.
Explaining the concept of merchant of record, he said, "eBay would start to be the seller and in doing so would aggregate that volume and be able to get lower PayPal or other payment operator rates."
Becoming the merchant of record has huge ramifications, as Etsy sellers found out when that marketplace forced Etsy Direct Checkout (now called Etsy Payments) on sellers. When a buyer pays for a seller's item through PayPal, the money goes to Etsy, not the seller.
Sellers didn't like it in principle - and it meant waiting longer to get their funds from Etsy.
One can imagine how eBay sellers would feel about it if eBay became the intermediary for PayPal payments. Additional concerns would likely center around eBay's history of glitches and poor customer service.
Schenkel said eBay was considering its options. It would mean more revenue for eBay, but it would also entail more costs - and eBay would take on risk. And, he said, "We would have to do trust, we would have to have some degree of additional customer service, all of which PayPal does for us today."
It seems it wouldn't happen at once - eBay would be limited to 5%, and then could scale to 10% over the next 2 years. Currently PayPal is over 85% of its business, he said. "So we could start to use other payment providers, or have PayPal be the payment provider for (eBay being) the merchant of record."
"And you know, again, the lens we're going to take is, do sellers want alternatives? Do buyers want alternatives? Can we make it more frictionless? Can we make it a better user experience? And along the way who's the best payment provider partner? Today it's been PayPal and we certainly can and will open it up to others."
Knowing now that eBay may be planning to insert itself into payments between buyers and sellers, it seems it could be the reason for eBay's rush to roll out a new selling platform called Seller Hub.