How is eBay Payments impacting PayPal TPV?

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For PayPal, eBay represented approximately 8% of PayPal TPV (Total Payment Volume) in Q4 2019. They are expecting to lose a quarter of this down to approximately 6% of the overall PayPal TPV by the end of Q2 2020.

What PayPal TPV from eBay transactions will remain after July 2020

This may be in part attributed to eBay’s rolling out of eBay Payments and partly due to growth in other areas of PayPals business. However, as of July 2020, PayPal’s five year operating agreement with eBay comes to an and but this doesn’t mean PayPal will automatically lose all of the TPV from eBay – a good chunk of it will remain.

PayPal branded transactions

From July, PayPal will continue to process all transactions in which the PayPal wallet is the selected funding source, whether or not the merchant has opted in to eBay Managed Payments.

Unbranded transactions

Starting in July, unless and until a merchant opts in to eBay managed payments or if eBay force merchants to migrate, PayPal will continue to process all payments funded outside the PayPal wallet (e.g. when a buyers opt to pay by credit or debit card).

PayPal ‘take rate’ (fees) after migration to eBay Payments

Once a merchant opts in (or is forced to migrate) to eBay Payments PayPal’s take rate on PayPal branded transactions will decrease. PayPal say that eBay will enjoy ‘a rate that is commensurate with a large merchant’.

What fees eBay will pay haven’t been revealed, but it’s reasonable to assume as in the past some large merchants have enjoyed PayPal rates as low as 1.9% that eBay will have negotiated a rate at least this low. However it’s equally possible that they’ve negotiated an even better rate but the exact fees they’ll pay are likely to remain confidential.

With eBay offering rates of around 2.7% for eBay Payments in the US, this would suggest that they have the ability to make significant margins on payments hence it’s no surprise that they are viewing it as a $2 billion revenue opportunity with a $0.5 billion profit.

The important part to remember for merchants (apart from waiting to discover exactly what rate will be imposed) is that the day you migrate to eBay Payments every buyer who wishes to will be able to continue to pay with PayPal. However they will also have the option to use additional local payment options including alternatives such as Apple Pay and Google Pay.

4 Responses

  1. They will lose even more. If they introduce the policy of with holding total fees for any failed or return transaction we will offer every payment method apart from paypal they will be removed from all our platforms.

  2. We had Paypal as our main payment processor on our website as we have two just in case there is a problem with one of them. When they raised the percent for volume discount we got rid of Paypal and even more so now that they are going to keep all the fees. Now we only have Square and Stripe and all works seamlessly. Not only are Paypal the most expensive overall than all the payment processors now but they keep everything when there is a mistake. I think Paypal will disappear one of these days due to lack of customers.

  3. We too have ditched Paypal from our website. Far too many fee increases by stealth of late, and when I asked them why this was happening, they claimed the costs of processing had increased.

    Anybody else not believing that little story ?

    I have not noticed any drop in website transactions since Paypal was removed.

    Paypal, something my Dear old Nan used to say would be helpful to you, that being you cannot get blood out of a stone.

  4. I’m a little unhappy about the recent changes to Paypal from a seller’s perspective but, from a buyer’s perspective, I love Paypal.

    Which means that if you don’t offer Paypal I won’t be buying off you.

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