When Adyen replaces PayPal as the default payment method on eBay it won’t mean the end of PayPal. In fact PayPal is just one of a myriad of payment options that Adyen supports. But what could eBay do with a new payments provider and how could they use the roll out of Adyen to improve the marketplace and re-imagine the gold standard for payments?
1) Lower fees
PayPal, both pre-acquisition, during eBay’s ownership and today as an independent company are in the business of making money from payments. eBay are already a cash generating business and don’t need additional revenues from transactions (don’t tell the shareholders!). They should aim to increase the frequency and value of transactions to grow sales for sellers and revenues for eBay, not simply view sellers as an endless cash cow with ever increasing fees.
Bringing payments in-house will incur expenses for eBay and there’s no reason that the actual costs shouldn’t be passed to sellers who in turn will pass them on to buyers. However, Adyen represents a real opportunity to offer lower rates than PayPal and pass the additional margins to sellers which will hopefully be reflected in lower prices resulting in a more attractive marketplace for buyers.
2) No more hidden fees
PayPal have over the years imposed a number of fees dependent on the payment method chosen by the buyer. If you have a personal PayPal account you can send payments from PayPal balances, Bank Accounts or debit cards for free, but pay by Credit Card and there is a fee of 3.4% + 20p (so much for no surcharges).
3) No more unpaid items
eBay have done a fantastic job of reducing unpaid items but if they own the payments system then there’s no reason that the remaining unpaid items couldn’t be totally eliminated.
In the UK it’s unusual to be able to purchase a fixed price listing without paying immediately, but there are some edge cases such as international transactions and Best Offers not to mention Auctions where the buyer can pay at leisure. eBay could firstly automatically take the funds from the buyer’s bank account when a transaction is finalised and secondly could take responsibility for payments and pay the seller when the sale is complete. eBay would then be responsible for collecting the payment from the buyer enabling sellers to despatch immediately.
eBay guaranteeing buyer payments might seem revolutionary and certainly will give eBay themselves a scare, but what other ecommerce site in the world lets you buy something and not pay? It’s time to get real and let retailers be retailers, a sale be a sale and payments something that just happens.
4) eBay Shopping Basket
There are a couple of issues with the eBay Shopping Basket (Shopping Cart if you’re in the US). It simply doesn’t work for international transactions and there are limits on how many items you can add to your Shopping Basket.
A second less known limitation is that if you add too many items to your eBay Shopping Basket, eBay will helpfully select some items at random for you to check out meaning that you then have to go back and check out the others in a second transaction. Why add friction to the shopping process?
5) Access to funds
One of the delights for consumers when selling on eBay is that currently you have some funds sloshing around in your PayPal account which you can use to pay your eBay fees and then spend the remaining balance on eBay. Conversely retailers and some consumers will often want to get their funds into their bank accounts as speedily as possible as they may want to spend them on other sites, pay their bills or pay in physical stores by card.
eBay will need to provide options but the most likely initial option is likely to be a daily sweep of sales with funds transferred directly to seller’s bank accounts. This won’t suit everyone for instance if you have subscriptions in PayPal or you want to purchase packaging supplies on eBay, but having the funds redebited from your bank account is less troublesome than having funds stuck in eBay.
There is of course the cost issue for eBay as if something sells for 99p on an auction will they really want to transfer minimal amounts to your bank or will they hold it until a payment reaches a certain level?
6) International Payments
PayPal currently impose cross border payment fees and use less than attractive currency exchange rates. The exchange rates are not even the same for every country, send money from the UK to Germany and the rate is 2.0% but send money to France and it’s 0.5% for a payment fully funded by PayPal balance or bank account. Use a debit or credit card and the rate jumps to 3.9% plus a Fixed Fee.
Worse still, PayPal are so sneaky that if you pay for a Sterling purchase with a Euro balance the exchange rate is worse than if you manually transfer funds from your PayPal Euro balance to your Sterling balance and then make a payment in Sterling! PayPal’s spot rate today is €1 = £0.844904.
eBay should minimise the friction of cross border payments and not view them as an additional source of incremental revenue. Sellers and buyers aren’t daft, they know when they’re being shafted.
16 Responses
Yeah, but Ebay aren’t going to do any of this, Chris.
They can’t pass up this opportunity to make more money out of sellers. Indeed shareholders and the stock market are counting on it. Which is why they are saying so little to sellers.
In their statement to the markets, Ebay announced the move to Adyen would earn them masses of extra money.
Go back and read points 1 to 6 again.
Does any of it make any sense from an Ebay boardroom viewpoint?
They have a one-off chance to boost profits. They’ve been unable to significantly boost sales on Ebay, still trailing in Amazon’s slipstream. The only real growth in income has come from big hikes in seller fees, especially those which are not linked to actual sales, such as shop fees etc.
The only beneficiaries from this shotgun marriage with Adyen will be Ebay.
eBay will only do what’s right for eBay. It is their platform after all.
Sellers? Like it or lump it, eBay’s mantra for years,,,,,,
As a seller with significant international sales, I get charged on multiple fronts by PayPal.
First on the cross-border fee’s, and then on the currency conversion back to sterling so that I can withdraw. Also converting 4 currencies back to Sterling every day is a chore! Where is the automation?
PS: You can withdraw a USD balance to a UK USD bank account with PayPal if you ask very nicely! It auto-sweeps as well so you don’t have to withdraw daily.
I agree they could do points 3 & 4, Chris.
Personally, we’ve never had much of a problem with non payers on Ebay, but anything in that direction would be welcome.
The problem with point 4 is much wider. The basket / checkout issue has bugged sellers on Ebay for years and they have not got round to fixing it.
This could be because they don’t regard it as an issue, or maybe it’s because they make money out of customers overpaying postage at the checkout, since they get a cut of that in the final value fee.
From both a customer and seller perspective, one single standardised checkout across Ebay, in all categories, in all countries, is the only way to sort the basket bugs out.
On Ebay.com, customers don’t even see the basket if they’re viewing items from another site, or if not priced in dollars.
So, whilst Adyen provides an opportunity to sort out the checkout / basket, this could have been done at any time. Due to system errors, depending on what device you are using, the checkout never works 100%, but it should do.
Being able to PAY for your items easily and without error is such a basic thing that it’s gobsmacking Ebay has not dealt with this long before now.
But I think if they were going to any of the things on this list, they would be trumpeting it now. The silence speaks volumes. I’m not optimistic about Adyen, but hey, Ebay, here’s your chance to reassure us on all the points raised by Chris.
Watch as ebay says goodbye to fees for transactions via Adyen….. and subtly increases fvfs at the same time! Talk about a coincendence!
You know im right!
How long will it be before we are forced to use eBay branded packaging on all our eBay orders?
Below is what eBay is all about these days so if you think they are going to pass on any savings, don’t hold your breath. US fees up by 9%
https://shares.telegraph.co.uk/news/article.php?id=1140858&archive=1&epic=EBAY
BEIJING (AFX) – The Chinese unit of US online auction service eBay will scrap all sellers’ transaction fees from today, amid market pressure from local competitors offering free services, including Yahoo-invested Alibaba.com, the Financial Times reported.
The move by unit eBay Eachnet, which will continue to charge users small fees to list goods for sale on its website, highlights the stiff competition the US company faces in China, the report said.
On Wednesday, eBay said it would raise the fees in the US by 9 pct for goods worth between 25 usd and 975 usd.
Ebay China had repeatedly waved aside challenges by Alibaba to withdraw its charges, saying in October that ‘Free is not a business model’.
However, its Chinese auction website sharply reduced its charges last year and recently began waiving transaction fees for the use of local escrow or PayPal services, the report said.
From today eBay Eachnet will scrap transaction charges while requiring sellers to settle deals using those payments services.
‘Each market is different…Chinese people are very price-sensitive, perhaps more than any other market,’ Lillian Liu of eBay China was quoted as saying.
‘It is very important for us to lower the cost for sellers and to encourage them to offer safe payment,’ she added.
In China, eBay’s transaction fees were previously charged as a percentage of the value of completed sales, ranging from 10 yuan for a sale worth 500 yuan to 115 yuan for one worth 20,000 yuan.
(1 usd = 8.1 yuan)
why all the whinging about fees ?
if your making a profit why worry
if your not go elsewhere