Starting today, the eBay payments global rollout begins. eBay will step up their transition from a world where PayPal was the defacto payment method on eBay and start to intermediate payments on their own platform.
“We’ve been helping prepare sellers for a transition to eBay’s own payments service which is going to massively simplify life for those trading on our platform – creating a more streamlined, less complex way to execute transactions, giving sellers of all sizes more time to just focus on growing their business with us. Buyers can also expect more control and choice over their transactions. In the coming months, we plan to introduce these enhanced services to more of our sellers, so more of our 300,000 SMB’s can benefit from an enhanced payments experience.”
– Murray Lambell, VP of UK Trading, eBay UK
Operating Agreement expires removing block to eBay payments global rollout
Having started the project to manage the end-to-end payments process on the eBay marketplace platform in late 2018 the rollout has been restricted by an Operating Agreement with PayPal that governed how quickly eBay could scale its management of payments. In the fourth year of the agreement eBay could only process 5% of total GMV and 10% in the fifth year, in just two countries, but now eBay can process 100% globally.
“Following the three (3) year anniversary of the Effective Time, eBay shall be permitted to declare itself as a Merchant of Record for transactions effected by third Persons in up to two (2) Covered Jurisdictions as selected by eBay in its sole discretion (each, a “Test Jurisdiction”); provided, that (i) the GMV transacted as a Merchant of Record on all eBay Covered Properties in each Test Jurisdiction during the fourth (4th) year of the Term shall not exceed five percent (5%) of the GMV on all eBay Covered Properties in such Test Jurisdiction during such year, and (ii) the GMV transacted as a Merchant of Record on all eBay Covered Properties in each Test Jurisdiction during each of the fifth (5th) year of the Term and the Tail Period shall not exceed ten percent (10%) of the GMV on all eBay Covered Properties in such Test Jurisdiction during each such year.”
– eBay Operating Agreement with PayPal
With this agreement now expired, eBay is free to move quickly with the eBay payments global rollout.
Payments processed to date
As of the end of the second quarter, eBay is already managing payments for nearly 42,000 sellers and has processed $4.7 billion in GMV in the US and Germany. Most sellers can expect to see savings in managed payments, with eBay saving sellers $17 million in transaction fees so far.
“Today marks a significant milestone for eBay on our journey toward a technology-led reimagination of our marketplace and provides a simpler and seamless experience for our buyers and sellers around the world. We have already seen incredible momentum with managed payments, and we expect it to deliver $2 billion in revenue and $500 million of operating income in 2022.”
– Jamie Iannone, President and CEO of eBay
That $500 million operating income Jamie refers to is roughly equivalent to a full quarter’s profit for eBay. In basic terms, by 2022 they are expecting to up their profits by 25% due to the eBay payments global rollout without any increase in GMV.
“We’re dedicated to building a platform that helps our buyers and sellers thrive. By managing the payments process, we’re creating a simpler, more unified experience for our customers, and streamlining operations for our sellers with one place to sell and get paid.”
– Alyssa Cutright, Vice President of Global Payments, eBay
Managed Payments Progress
eBay managing payments will now streamline the experience of selling and getting paid on the platform, which they say will give sellers an easier way to manage their business. Through managed payments, eBay is also able to provide buyers with more flexibility and choice in their payment options, offering options including credit cards, debit cards, gift cards and PayPal. Apple Pay is available as a payment option on iPhone and iPad. Google Pay is also available on the eBay site and on the eBay Android App. eBay have also enabled SEPA direct debit as a payment option for buyers in Germany, Afterpay for buyers in Australia and PayBright for buyers in Canada.
As eBay scales its management of payments, they say that they will continue to enable new features and enhance capabilities, including adding options for seller financing and more bank payments options.
The progress the company is making is right in line with expectations. Over the coming weeks, the company will be activating managed payments in the UK, Australia and Canada and has already begun registering hundreds of thousands of sellers in all of these markets for the experience. There are 255,000 sellers enrolled in managed payments globally (42,000 of whom are already actively using eBay payments).
Are you ready?
We know many sellers are wary and quite rightly still have questions as to how the eBay payments global rollout will impact their business – both from a straight financial perspective (what will it cost compared to using PayPal), an operational impact (e.g. how will listing on international eBay sites work?), an administrative challenge (e.g. how will I complete my next VAT return digitally?), and frankly a trust issue (will it work or will I find aspects that don’t work the way I’m used to?).
The reality is however that with the operating agreement with PayPal expired, today eBay changes and the eBay payments global rollout effectively exits the trial phase and moves into the full steam ahead phase. Regardless how many misgivings you may have, it’s time to accept that it’s happening and to build a business that works with eBay payments rather than reminisce at how great the past 25 years have been.