eBay drops PayPal – Announces Long Term Plan For Intermediate Payment

eBay sent an announcement to its sellers that it will be dropping it’s longtime partner and payment processor PayPal and switching to Adyen BV, a Netherlands based payment company.

What does this mean for eBay sellers?

It’s going to be hard to say how this will impact sellers in the long term.  In the announcement, they said it will be a 3-year process to completely convert all buyers and sellers to the Ayden Intermediate Payments System.  According to eBay’s announcement, here are the benefits:

For sellers:

  • Lower Costs and More Control of Their Economics. Most sellers can expect their costs of payments processing to be reduced after they transition to eBay’s intermediated payments model, and benefit from a simplified pricing structure and more predictable access to their funds.
  • A Central Place to Manage Their Business. eBay is working on solutions to provide sellers with information about their eBay business, inclusive of payments information, in one place so that sellers can easily track and manage all of their transactions and customer interactions on eBay.
  • Greater Buyer Reach and Improved Conversion. By offering buyers more choice in how they pay and expanding payment options into more geographies, eBay believes sellers will be able to reach more buyers and improve conversion.

 For buyers:

  • More Payment Options at Checkout. eBay is focused on providing consumers greater choice in payment options at checkout.
  • An Integrated Checkout Experience. eBay will manage the entire checkout experience, delivering a more streamlined experience for consumers.

It feels like they will be moving to the payment strategy that Etsy has for its sellers.  For smaller sellers who are used to having access to their funds immediately, this will be a tough transition.

Will you still be able to use PayPal?

From what I understand, it looks like PayPal will still be a payment option for eBay even after the transition.  Most likely though, using PayPal will be like using your own credit card processor now.  You will most likely lose some seller guarantees that you are used to.

How will I save money?

Currently, PayPal charges 2.9% plus $.30 on every domestic transaction.  We can only hope that eBay will negotiate a better rate than that.  However, Ayden is the current processor for Etsy and they charge 3% plus $.25.  So, time will tell.

What’s not to like about this transition?

  1. It’s change.
  2. It’s unknown how the payment schedule will work. If it’s like Etsy, it may take up to 3-5 days.  If it’s like most sellers on Amazon, it could be every 2 weeks.
  3. Not having immediate access to your funds.

How will this affect returns and chargebacks?

I personally don’t think this will affect returns near as much as some of the other recent changes.  The return policies are driven by payments.  However, this may make it easier to process discounted refunds because customers damage items, don’t send the same item back, etc.

As for chargebacks, I this we will see an improved process.  Currently, if a customer isn’t happy with the outcome of an eBay transaction and eBay doesn’t resolve it, they can just file a dispute in PayPal.  So right now, we have 2 battles to fight when it comes to issues.  This still won’t stop the issue if a customer files a chargeback with their credit card, but it’s will still be an improvement.

If you would like to read eBay’s complete statement, you can view it here.

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