The virtues of eBay Managed Payments (and the downsides)

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If you read the press releases from eBay, you would be right to think that they’re extolling the virtues of eBay Managed Payments and selling the story of how great they are.

The virtues of eBay Managed Payments

A positive spin from eBay is as you’d expect, so there are case studies of happy sellers saving money on fees, reports of $20 million being processed through eBay managed payments and that 1 in 10 transactions on Apple devices being settled with eBay Managed Payments first integration with Apple Pay.

What is worth remembering is that $20 million (or an annualised run rate of half a billion dollars) is insignificant in comparison with eBay’s overall revenues on the marketplace and PayPal don’t even see it as a rounding error on their balance sheet. eBay Managed Payments is still tiny and in effect little more than a small scale test.

The downsides of eBay Managed Payments

PayPal had plenty to say about eBay Managed Payments in their last earnings call and, apart from the ‘softness’ and low growth of the eBay business and reaffirming how closely eBay and PayPal intend to work in a world where the entire eBay marketplace migrates to eBay Managed Payments, they also say that not all sellers who were early adopters are happy:

“If you look at the seller feedback on the eBay seller forum and look at what those sellers are saying, those that have moved over to intermediated payments; you’ll see comments from them that their sales have dropped 40% to 60% and they’re clamouring to come back to PayPal. So both eBay and PayPal want to serve our mutual customers extremely well, it’s a major integration for eBay to put PayPal on, we’re committed to both of us to having PayPal on intermediated payments beginning next year but we feel really great about the growing value proposition that we have, and we feel great about the partnership that we’ll have with eBay going forward as well”.
– Dan Schulman, President and CEO, PayPal

“I would just add to that that eBay has responded to those comments saying that sellers have issues with the drop in sale, they can revert back to PayPal in the near-term and in the long-term they are working hard to make PayPal available as a payment option, and we’re working hand-in-hand with eBay to try and make sure that’s available to those customers given the strong demand from customers”
– Bill Ready, EVP & Chief Operating Officer, PayPal

There are other downsides which may outweigh the virtues of eBay Managed Payments – the lack of integration with software accounting and multichannel managements solutions and the inability to use eBay Global Shipping program are top of the list for many sellers. Not having immediate access to funds is also a problem and this is especially so for those who find themselves without funds in their PayPal account and discover that they can’t purchase eBay Postage with their eBay Managed Payments balance.

The reality of being an early eBay Managed Payments adopter

Amongst all the noise it’s hard to assess the drop out rate of buyers who, faced with having to enter their credit or debit card details rather than pay with PayPal, don’t continue to complete a transaction. We all know that sales on eBay, and indeed on any marketplace, can fluctuate enormously and realistically a three week period is not long enough to assess if sales are up or down. It would require comparisons with last month, last year and taking into account any changes that have happened to Best Match, listing quality, number of new listings launched, usage for listing enhancements, eBay sales events and eBay Promoted Listings, and even whether it’s raining or sunny.

Three weeks is way to short a time period to know if eBay are right and sellers enrolled in eBay Managed Promotions are doing fantastic or if PayPal is right and drops in sales of 40% to 60% are what’s happening. Personally, I’d guess at somewhere between the two view points but for serious business sellers, if you’re offered the opportunity to take part in early marketplace tests consider carefully before committing how it might impact your business either positively or negatively if you are reliant on your revenues.

7 Responses

  1. You want to believe it can work…. but sadly almost every single major roll out by Ebay has been ill thought out, mismanaged, poorly targeted, glitchy….. do i need to go on?
    This though has to be the biggest thing that could hit sellers directly and hard… in the pocket.
    Buyers don’t mess around any more, time is king. So a few messed up, or difficult purchases will simply drive them away. There are enough issues at ebay already.
    Ebay would have been better running the 2 side by side on equal footing and then slowly adapted as people adapted. It’s like telling every one who drives cars to suddenly take the bus! I for one will be holding back as long as possible.
    Sorry ebay…. but i simply don’t trust you to get it right, and as you have no regardless to the wellbeing of your sellers already, why would you be concerned over us with this?

  2. What was more interesting about that Paypal update was not this story, which was a sideshow really, as it effect’s only a small number of merchants.
    Was the fact that ebay marketplace sales are not going well, while Paypal are up the amount of transactions coming through ebay is not…why the shares have gone down again….tells the real story.
    From our own point of view ebay trading is at is lowest for OCTOBER in years….

  3. Problem is obvious to me = sellers are being educated about not accepting Paypal in the short run – busy 4th quarter, but buyers are being educated to not buy from sellers no longer offering Paypal.. The problem with sellers who opted in, is they have absolutely no clue how many buyers pass by buying from them and go to their competition who accept Paypal.. I will opt in when buyers can have the choice that they prefer.

  4. I’ve tried to get an answer from eBay over the past two weeks, but without response. I sell internationally on different eBay sites and receive different currencies, such as euros, dollars and pound sterling – it suits me well, and with Paypal I can hold the currency as long as I want until the exchange rate is more in my favour before sending it to the bank. If I try to send a foreign currency to my bank I am charged a significant fee. I need to know that eBay’s managed payment will only send a designated currency straight to the bank account, and not say dollars to an account in pound sterling? Obviously the ability to hold currencies until the exchange rate is favourable seems out of the question, which is why I am not all looking forward to this change. Hopefully Paypal will be integrated back in quickly, and customers will largely still opt to use it.

  5. I hope so Jay, otherwise I will be forced to close my eBay.com shop, and I doubt I’d be alone in this scenario. Paypal don’t provide the best of exchange rates, nor do my credit card company, I’m guessing eBay would be comparable, but being forced to accept the rate on the day is a big thumbs down. Sometimes I can hold out a few weeks or even months and really maximise profits by choosing the right date in which to transfer funds.

  6. Just an update to say I finally got a reply from eBay asking about being able to nominate a currency to have paid to a bank account to prevent potential bank fees, and the answer is, they don’t know yet as it’s only running in a limited scope for a few select US sellers.

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