Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Mar 4 2020 20:24:45

eBay Managed Payments: Resistance Is Futile

By: Ina Steiner

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A seller forced into eBay Managed Payments by March 3rd hit a roadblock that could have broader implications for the marketplace as it mandates its own payment processing with the goal of having most sellers enrolled this year.

The seller, who described himself as a casual seller of 15 years, said when his March 3rd deadline came for signing up for Managed Payments, eBay blocked him from further selling.

Conceding defeat, he went to sign up for the program, but was concerned when it required him to enter his social security number. In his post on the eBay discussion board, he wrote, "I have never given that out to anyone other than required government entities, and have always been told to never give it out over the internet. That would be just another server waiting to be hacked and have the SSN stolen. And I don't know what other personal info they want of me after that, because I couldn't get past the first page. So, am I finally going to have to part ways with eBay after all these years because I'm protecting my SSN?"

His post generated an interesting discussion, with some pointing out that the government requires payment processors to collect the information for Form 1099-K reporting, and that he'd likely given his social security number to PayPal. 

The seller's experience points out a challenge for eBay in transitioning to Managed Payments, though not an insurmountable one - people have made similar complaints when forced to provide financial information and documentation to other companies such as PayPal.

An eBay moderator addressed the seller's concern with the following response on the eBay discussion thread:

"I highly recommend you contact Customer Service so you can speak with our managed payments team and have your concerns addressed. They will be able to go into more detail about account security, tax requirements, and any other details that may be relevant as to why a payment processor would need your social security number."

The seller's post indicates eBay is including small sellers in the Managed Payment mandate, and it will be interesting to see how it continues to roll out and how sellers react. The bottom line: Managed Payments will eventually become mandatory for all sellers as eBay continues to roll it out in batches, so it's best to be prepared. You can learn more on this page of the eBay website.



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Readers Comments

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Vigilant Eye On eBay This user has validated their user name.

Wed Mar 4 21:26:39 2020

As is the case with many merchant accounts, PayPal only requires a user's social security number if the 200 transactions and $20000.00 in yearly sales threshold set by the US government is reached.

Like the seller mentioned in Ina's post, I will not be providing my social security number, a photo copy of my driver's license, nor any bank account information to eBay or Adyen (a foreign company that was established in 2006).

Combined, the aforementioned information is a recipe for identity theft.

Providing them with a list of reasons why, notified my eBay customers months ago that I would be exiting eBay once managed payments became compulsory.

Given that most of my clients can save a lot of money shopping directly from my site, rather than my venue listings, many have opted to migrate.

Unlike eBay sales, which entered bear market territory years ago, my off venue sales have seen steady year-to-year growth.

Really expect a huge rise in off-eBay sales once the managed payments initiative is fulling implemented.

One would have to be really desperate to risk the costly implications of identity theft for the measly sales figures that eBay generates.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Frank Abagnale This user has validated their user name.

Wed Mar 4 21:47:22 2020

"They (managed payments team) will be able to go into more detail about account security".

Basically what this means is that when your account is hacked, ebay will issue an apology letter.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Vigilant Eye On eBay This user has validated their user name.

Wed Mar 4 21:59:08 2020

It just occurred to me that sellers can request a federal tax identification number from the IRS.

In order to comply with any US government tax reporting requirements for businesses, eBay and Adyen are supposed to be able to accept the aforementioned number in lieu of an individual's social security number.

As the seller in eBay's post indicated, the social security department regularly instructs people not to provide a social security number as a means of identification unless it is required by existing legislation (e.g., employment, for which social security and income tax are deducted from one's pay and opening accounts with federally registered banks and credit unions).

Neither Adyen or PayPal are registered or managed as banks, which means one's funds are not Federal Deposit Insurance Corporation (FDIC) protected if either firm were to fail.

Unless eBay and Adyen are planning on deducting social security and/or expected  income taxes due, there is no reason for either of them to have an individual's social security number.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Silver Ice King This user has validated their user name.

Wed Mar 4 23:42:48 2020

@Frank Abagnale

After how much business Ebay lost after their last acknowledgement of having been hacked what gives anybody the idea that they will ever admit it again?  I am sure they have been hacked several times since then but there was no way that Wenig would ever let that information be disclosed because it would have destroyed an already shaky stock price.

I am not sure that Ebay even has anybody capable of determining if they had been hacked since their CTO left for personal reasons so long ago and they just divided is responsibilities up and have everybody left a little more to do whether they were qualified or not.  There is no way that I am planning on giving Ebay my SS # and if I even do go through Mangled Payments it would be with my FEIN only, which they would be forced to accept.  The bank account would also be completely separate from all of my other accounts so there would be no way for Ebay to take money without my approval.

I think they are testing the waters to see what percentage of smaller sellers they will probably lose once they force everybody over.  It will not stop it from happening but will allow them to have laid off enough employees so that they hope it will not effect their bottom line.  I think they are going to be surprised at just how many Sellers they lose when they make this forced transition to Mangled Payments as everybody has already seen it is nothing but another money grab and if they do not make enough on it I fully expect the hold times on funds to be increased so they can earn addition interest on the funds.

I also think they are going to be trying very hard to sell the marketplace very late this year or as soon as possible next year as they have realized it cannot be fixed and they do not have the talent to start over like they did with their flop Sellers Hub.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Gemz This user has validated their user name.

Thu Mar 5 00:57:58 2020

Out of all the absolutely stupid ideas that eBay has come up with over the years, and how many sellers they have lost due to these stupid ideas, I think this one will turn their stock into wallpaper (or close enough to it compared to where it was a year ago). If they want to keep screwing over their shareholders then let them continue down this path until Chucky Cheeses stock looks better than eBay for investments. Amazon is killing them as it stands and Bezo's, I'm more than sure, is certainly laughing at this latest idea of theirs. I think it may open the door for lawsuits as well since by having eBay get the money for the sale, then pay the seller seems to open the door for litigation since they are no longer just a venue but in actuality, the actual seller of which gets the money and then gives the seller their "consignment" payment after eBay takes their cut. I truly believe that if they keep running the ship like this that in less than 5 years from now the name eBay will be a thing of the past after it gets bought out or liquidated.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: dajlist This user has validated their user name.

Thu Mar 5 01:19:19 2020

Stories like this remind of of the general ignorance within the population. It's 2020 people, your information is already all over the world. You should already be protecting yourself with the credit bureau's in such a way that your social security number isn't a threat. You should already be protecting yourself so that your bank account info doesn't matter. The credit bureau's got hacked, you're not going to prevent anyone from doing anything. Wake up and welcome to reality.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

This user has validated their user name. by: Marie

Thu Mar 5 01:56:33 2020

@Vigilant Eye On eBay
"As is the case with many merchant accounts, PayPal only requires a user's social security number if the 200 transactions and $20000.00 in yearly sales threshold set by the US government is reached."

That isn't accurate.  When someone sets up their PP account to be used for collecting payments from selling stuff, PP requires an SSN.  They have no way of knowing if you will meet or exceed the IRS minimum requirements for the 1099, so instead of chasing the number down AFTER you have reached that threshold, they require it up front.

Several years ago when 1099 started, PP had member update their PP accounts with their SSN or they would no longer be able to use PP to collect payments.  

Now they have requirements for it for verification purposes too.  So PP has wanted it for a long time to make sure they can adhere to the Federal Tax Laws.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

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

Thu Mar 5 02:52:32 2020

Yes, but Paypal is doing business in this country, and as such has to obey certain laws.  Ebay states in their user agreement that they are not responsible for errors their foreign payment processors make (and they go out their way to state there are more than one of those processors) .  They also tell you that you will be charged for dispute processing. As for identity theft, I imagine our information (and that means Social Security numbers, addresses, bank accounts, etc.)  will be shared and possibly sold to those who buy such things. Perhaps not by the payment processors or Ebay, but by the anonymous partners they state they share information with.  

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

This user has validated their user name. by: Marie

Thu Mar 5 03:09:17 2020

@Tiffee Jasso

"...I imagine our information (and that means Social Security numbers, addresses, bank accounts, etc.)  will be shared and possibly sold to those who buy such things."  You could be right.  Especially if Ebay management has a strong desire to go to jail for Federal Law violation.  [that's sarcasm, in case it wasn't apparent].

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: roseland This user has validated their user name.

Thu Mar 5 03:19:54 2020

This was taken directly from the IRS web site regarding applying for a federal Individual Taxpayer Identification Number.

Use Form W-7 for the following purposes.
• To apply for an ITIN. An ITIN is a nine-digit number issued
by the IRS to individuals who are required for federal tax
purposes to have a U.S. taxpayer identification number but who
don’t have and aren’t eligible to get a social security number
(SSN).

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Chicago48 This user has validated their user name.

Thu Mar 5 03:34:48 2020

MP must only apply to store owners, because I do auctions only and have never gotten any info from EB about managed payments.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: FeelingFroggy This user has validated their user name.

Thu Mar 5 03:50:25 2020

I guess those of you who think you won't, can't or haven't ever provided a social security number to paypal or ebay just might want to now start thinking of moving all your listings somewhere else. Ebay will win this one and if you don't want to do it then its a free country. When ebay blocks you then just move on and don't bother the rest of us with your nonsense.

To try making a point by cutting off your nose only hurts you. Ebay doesn't care. Its their playground and their rules. BYE BYE

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: angryllama This user has validated their user name.

Thu Mar 5 04:27:16 2020

@Chicago48   It is CRAZIER than you are even imagining.  RECENT announcement from eBay was that .... wait for it .... a WHOPPING 20,000 eBay accounts are currently in Managed Payments.
Let that sink in.   HUNDREDS of THOUSANDS of eBay users and a TEENSY fraction of them have ever been FORCED or (gasp) VOLUNTEERED to be in this program while it is in "BETA TESTING MODE".
I have opined this before, but it bears repeating.  I have the niggling suspicion that eBay only reports 20,000 as that is how many EVER EVEN ONCE were in the program and they (eBay) then has NEVER removed those bedeviled, bedraggled, and demeaned "lucky lucky duckys" who QUIT or threw eBay management the proverbial one-finger Brooklyn Salute escaped this LOOMING TRAIN-WRECK.
20,000 ever EVER in this program does NOT mean that 20,000 are CURRENTLY still in it.
Twenty Thousand is a DROP IN THE BUCKET of eBay Sellers AND Buyers.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: hawk This user has validated their user name.

Thu Mar 5 06:52:53 2020

as usual they are way over the line with this power and theft they are doing. just more mafia crap to destroy small sellers and honest people. why are they still out of jail. oh ya ---money buys all corruption. just look at our politicians buying corruption.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

This user has validated their user name. by: Carl

Thu Mar 5 07:29:16 2020

@angryllama
20,000 was the maximum they were allowed at that time.
Because of their operating agreement with PayPal; anymore signing up at that first stage would have taken them over the allowed % by PayPal.
That agreement comes to an end in a few short months then everyone will be forced into it.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: Windkissed This user has validated their user name.
Web Site

Thu Mar 5 07:39:41 2020

I was of the understanding that anyone who makes $600 on ebay would get a 1099.  I never got one.  I make over that but I do not sell 200 items or make $20,000 or more.  I file taxes under my SS number don't need a Federal ID.  I have paypal and am very happy with it.  I see no need for any other Managed payments or anything else.  I can't understand why ebay ever chucked paypal?????????

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: plcombs This user has validated their user name.
Web Site

Thu Mar 5 07:58:27 2020

From a US Income Tax standpoint, eBay cannot issue a 1099, nor any other relevant information for income taxes as Gross Sales are not Income. 1099's are for pure income only, eBay has no way to determine "Income" as the cost basis of "Goods Sold" is unknown to them. A 1099 would be worthless.

They actually have no legal basis to require sellers to keep on file SSI #'s. They want it purely as a method of ID'ing sellers.  

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: redheadedlady This user has validated their user name.

Thu Mar 5 08:56:12 2020

I sell on etsy and ebay and between the two I have sold over $20,000 this past
year.  Etsy has my ss # and I have to report everything I make now.
I was also in managed payments during the beta testing.  It worked great for
me.  Money was deposited in my bank account every day (by the way) I am
doing the same thing on etsy.  They deposit every day and send me an email.
The only reason I opted out is because OLD people don't way to pay that way.
They can't handle change and are used to paypal.  So, I lost sales because of it.  So, I opted out with no problems at all.  To me it was a good program because you do not have to paypal the final value fees on top of ebay.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

This user has validated their user name. by: Ina

Thu Mar 5 09:00:24 2020

Be aware of the difference between 1099-MISC and 1099-K. In this instance, we're talking about 1099-K, which applies to payment processors, which PayPal is, and eBay has now become.

Payment processors must report payment amounts to the IRS on Form 1099-K when a seller reaches a threshold of $20,000 in gross payments with over 200 transactions.

Sellers located in Massachusetts and Vermont receive a Form 1099-K if the gross amount of payments equals or exceeds $600, irrespective of the number of payments, and those states will be notified in addition to the Internal Revenue Service.

Payment processors must have a merchant's tax ID # to file Form 1099-K.

Perminate Link for eBay Managed Payments: Resistance Is Futile   eBay Managed Payments: Resistance Is Futile

by: up74 This user has validated their user name.

Thu Mar 5 09:14:52 2020

If ebay is to give out 1099K instead of Paypal then they would be required to collect social security or tax Id #'s. What is really scary is how accurate that information will be.
I am still trying to get the sales tax amount ebay collected on my sales for Oct 2019. It did not come up in Paypal for that month. In trying to get that info from ebay, I got this response from ebay...
''Please know that I’ve already collated the items you sold which has tax added and collected by eBay. However, as of this moment I’ am still getting the data manually since we don’t have any tools to gather the taxes automatically. I’ll get back to you once I completed the sales tax data.''
Wait WHAT? How absurd is that they don't have tools to collect that data???
Ebay managed payments will likely be the death of ebay, I'll be moving on...

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