4 years after eBay PayPal split both now want decree absolute

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When we’ve been talking talking in terms of the eBay PayPal split and eBay launching their new eBay managed Payments solution, we’ve largely considered things from the eBay side of the story. eBay see payments as being a massive money spinner as they intend to take an additional slice of GMV in payment processing fees on top of the normal eBay selling fees.

eBay are being held back in their roll out of eBay Payments by the five year eBay PayPal split operating agreement they signed with PayPal when the two companies split. Currently eBay are only able to divert 5% of GMV away from PayPal and only operate eBay managed Payments in one country. From July that doubles to 10% of GMV in two countries. Bearing in mind that eBay want to scale payments to be a $2 billion annualized revenue and $500 million annualized operating income business unit one might think they were chomping at the bit to get going.

However it might be that PayPal are more keen to ditch eBay than eBay are PayPal. PayPal as the other signatory of the eBay PayPal split operating agreement promised to give eBay it’s most favourable terms compared to marketplaces eBay consider to be competitors and that’s preventing them from signing the type of deal that they’d like to with other businesses. Like eBay, PayPal get considerably more freedom to do business the way they want from July 2020 when the operating agreement comes to an end.

“Once we are sort of freed of those shackles next year, it gives us an opportunity to go do things with some of these other marketplaces. It just gives us a freedom that we didn’t have before.”
– John Rainey, CFO, PayPal, via Business Insider

Exactly which marketplaces PayPal are eyeing up remains to be seen although they’ve admitted to wanting a deal with a ‘large Chinese marketplace’ and already have deals with the likes of Facebook and Instagram. And of course in the West that is the giant Amazon which has to be a desirable target for PayPal if they can get their foot in the door.

PayPal’s calling card is the temptation of 277 million users – which was up 17% in the first quarter of 2019. That’s a potential bucket load of buying power from consumers to offer a new marketplace.

What does this mean for merchants? Well eBay will still allow buyers to pay with PayPal but the funds will go through Adyen and eBay Payments but you already sell on eBay. Where your real interest should lie is to watch which marketplaces PayPal signs deals with and jump onboard as swiftly as you can. PayPal will take customers with them but you’ll also attract new customers and they’ll be able to pay via the PayPal payments you’re already accustomed to accepting.

4 Responses

  1. Something is happening on Paypal. When you disperse your money by the time you log out of Paypal and log in to my bank account the payment is already there. Yesterday that moved to 4 hours and today I have cashed out and it now says Payment in to bank account will be 3-4 DAYS. Anybody else getting the same. If any help I’m in the UK.

  2. If I was eBay I’d also be keen to distance myself from Paypal. From a transactional point of view (as both a buyer and a seller) I find the Paypal process seamless, but if I ever have anything out of the ordinary to discuss with them, they are a nightmare. They are too big and too disinterested in small businesses and individuals. And as eBay is primarily concerned with SMBs and individuals, they should take note. I’ve made the personal decision to cancel my Paypal account, and this will likely have a knock on effect on how much I have to do with eBay.

  3. Never had any issues with paypal in over 12 years. The only niggles are the messages which seem to contradict like we have ruled in the buyers favour then a day later they say we have not charged you.
    The thing i like is you know where you are and once all your eggs are in one basket with eBay its a beast that will keep taking. We will be lambs to the slaughter.

    Yet next year they will tell you how much they have grown. But not in real terms of buyers and transactions just the extra charges sellers will be making. Then they wonder why now we are selling much more on Amazon and the gap in costs has nearly swung to Amazons favour now.
    Another 6 months and it will but just sales alone are increasing year on year where on eBay they are falling month on month.

    So that’s why they need more money from elsewhere. They introduce everything to grab more and more nothing for sellers

    I got a message yesterday saying you already ship most of your items ahead of schedule and for free yet do not have the fast and free logo. Folow this video on how to add it and get more sales.

    Well we did it when it was first introduced and then when items did not get there on time they bash you with a big stick. I was forever on the phone getting the metrics corrected.
    Now we just set it to suit us and then over deliver to our customers.

    They have a system which is not fit for purpose they hit you when an item is sent confirmation of delivery and it is attempted and taken to the delivery office when no-one is in and they go and collect a week later (not my fault) they then hit you with a late delivery you phone up and show them the details and they remove it.
    So why introduce something with such shortcomings


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