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

Tue Oct 2 16:26:11 2018

Hey Donahoe, you are Chairman of PayPal, I am not opting in to eBay Payments, Devin is the man you should be working with sellers to get fired, don't blame sellers, you hired this White Collar Criminal, he does not have the approval of sellers.

The Brain Dead eBay Board of Directors is sitting back watching this moron destroy the company, he must have made Billions of  dollar shorting the stock at 46 Bucks.

Get the SEC involved and fire this clown before eBay is bankrupted making his short trade worth 48 Billion dollars.

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

by: Geetar This user has validated their user name.

Tue Oct 2 16:38:40 2018

I was waiting for this debacle to play out.

I do not have a PayPal working cap loan, but did have one twice. I wondered about doing it again, but this whole thing prevented me from even thinking about it.

Most likely I would have gone to the bank instead, it seems the rate is lower than the calculated paypal rate. And I repaid the loan back to paypal about twice as fast, making the banks percentage rate even more attractive. But I wonder now that rates have risen how it would compare!

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

Tue Oct 2 17:11:35 2018

WHOOPS looks like Ebay forgot a very important question of those that responded to the invitations to join this payment process.  Do we happen to know about how many sellers are affected by this?

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

by: DingDong This user has validated their user name.

Tue Oct 2 17:27:49 2018

I remember reading when the eBay Payment test asked for sellers to opt in and get a better fee.
BUT
Later, after those sellers opted in the eBay Payment test that is when the sellers were told that they couldn't accept Paypal payments.

IT'S EBAY, that has put those sellers with Paypal loans in default for eBay's deceptive ways.  

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

by: DingDong This user has validated their user name.

Tue Oct 2 17:28:59 2018

.... AND EBAY should allow those sellers with Paypal loans out of the eBay payment test because of this  

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.

Tue Oct 2 17:33:00 2018

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

I'm sure ebay will come out the looser, as paypal has more customers then ebay, but it will for sure hurt Paypal a lot, and ebay sellers will pay the ultimate price when the dust settles.

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.

Tue Oct 2 17:41:01 2018

Does somebody at ebay have a picture of the SEC chairman and a goat who will remain nameless?

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

Tue Oct 2 17:47:29 2018

And the news about Managed Payments just keeps getting better. I know Devin has never had a bad idea in his life, but the BOD or someone needs to step in NOW and dump Managed Payments until it can be relaunched with better conditions for the sellers.

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

Tue Oct 2 17:51:17 2018

@ding dong

That isn't exactly the timeline on how that all transpired.

Responding to the invitation to join the program did NOT opt those sellers into the program.  It was later, after Ebay reviewed the responses that Ebay sent an email out saying they were accepted into the program.  

But BEFORE that happened, it was well publicized that the initial launch [not a test] would not be accepting GSP or PP.

Ebay didn't accept any sellers to actually be opt'd into the program until mid or later in September.  Just as the program was launching.

I certainly agree with you that Ebay should allow any and all sellers in the program to exit the program if they have a PP working capital loan.

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

by: RL15 This user has validated their user name.

Tue Oct 2 17:59:13 2018


another great job by the delusional ceo, keep screwing the sellers

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

Tue Oct 2 17:59:33 2018

I doubt there's any chance that eBay will allow any seller to opt out of the program now. They aren't going to care about what sellers may have agreed to with any company outside of themselves.

As is usual, the poor seller is going to be left to fend for himself.  

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

Tue Oct 2 18:06:53 2018

There are some reports on the Ebay threads of Ebay allowing sellers out of the program.  It seems to me that this would be a clear reason why to let some of them out.  Ebay would have no reason to force the sellers to stay in the program as it is forcing the sellers to breach their agreement with PP and that would clearly lead to legal trouble for Ebay if they forced sellers to breach their PP contracts.

I realize others will say different.  But it would not make sense on any level for Ebay to do this now that they are on notice that PP is upset by this.

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

Tue Oct 2 18:11:44 2018

The way I've read the posts on the boards about this is that the person pretty much had to take a hissy fit and likely was a much bigger player on eBay.

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

by: Shackles4Devin This user has validated their user name.

Tue Oct 2 18:51:42 2018

Completely agree with Ina's Title. I don't think PayPal was aware of being left out until summer of 2019. Someone made that call and PayPal found out. That led to PayPal contacting eBay. eBay weaseled it's way out of this by blaming the sellers and reminding PayPal that they had loans. Hey, PayPal..... this is eBay's fault. How much more egregious can eBay get??
Now, it's time to call PayPal and notify them that sellers were probably misled. There's only one word that comes to mind: SCUMBAGS!

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

Tue Oct 2 19:04:54 2018

Ebay clearly made a serious mistake.  But sellers were NOT mislead if they were paying attention.  I know some choose not to read the emails they receive from Ebay, but that is no more Ebay's fault than it is when a buyer won't read your listing.  The information was shared.  Whether the seller read it or not is a different issue.

I think this problem is more of Ebay not thinking things through.  They have a long history of doing that.  And sellers that agreed to enter the program did not think it through or were just not paying close enough attention.

But it does boil down to Ebay's responsibility.  And it is Ebay's responsibility to let the affected sellers out of the program sooner rather than later.

On some thread there were sellers asking this question BEFORE the program started.  Not that everyone reads the threads, but I'm just saying it isn't a new question for some.  Now PP knows and Ebay has to react to this as some of their sellers are under contract with PP.  

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.

Tue Oct 2 19:20:02 2018

ebay on surface is a cluster fug. Too many hands in the soup.

Their so-called "legal dept" cannot cross T's and dot I's.

It's painfully obvious that no one there knows what a checklist is, much less what it's used for.

ebay...Experimentation to failure. Successful Completion is but a dream.

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

by: Geetar This user has validated their user name.

Tue Oct 2 19:34:41 2018

You cannot tell me ebay didnt even think about the paypal loans. Or better yet that it did not come to mind. That is a crock of bull. They knew, they chose to ignore it. Why?, because they want what they want, and want it as fast as possible. Everything they have been doing wreaks of desperation. Everything they do will be full of problems from here on out as long as they keep the current CEO.

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.

Tue Oct 2 19:39:23 2018

Devin has no regard for anyone, including Donahoe the dummy that hired him, Devin even screwed him in his quest to enrich himself.

Would not be surprised if Devin is working behind the scenes with a hedge fund that shorted eBay at 48 bucks a share, someone made billions as the stock fell quickly in the last 6 months and I'm sure Devin is in on the scam.  

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.

Tue Oct 2 20:05:18 2018

Worth repeating...ebay is like a pimple-faced nerd who finds a Sigma Chi frat pin, and wears it outside the frat house at a Sigma Chi party,

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.

Tue Oct 2 20:35:41 2018

I'm sure the ebay payment opt in rate is very low, and out of that small group very few have paypal loans, we're probably talking very low numbers

we have never used a paypal loan, and that's probably the same with most

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