Woman making payment on laptop

During an investor conference in November, eBay CEO Jamie Iannone said that the company will expand eBay Managed Payments, including extending the service to cover C2C transactions.

C2C transactions on eBay means personal or consumer sellers that use the platform to get rid of some items they may have at home. They do not operate as a business seller and often are mostly buyers on the platform that occasionally list an item on eBay.

In a blog post the company published this week explaining how the new service will work for consumers, they said, “eBay is expanding its management of payments to all consumer sellers by the end of 2021.” This provides the first real timeline for the new rollout of eBay Managed Payments to C2C transactions.

eBay Managed Payments Remains Controversial Among Some Sellers

For a long time, PayPal handled virtually all electronic transactions on eBay as the service was tightly integrated into the marketplace. It also made it easy for sellers to use the proceeds from sales through PayPal to purchase items on eBay. PayPal was owned by eBay until 2015 and spun off primarily due to shareholder pressure claiming PayPal’s growth was being held back.

The belief was that once it would be free from eBay’s ownership, it could pursue other opportunities in the fast-growing digital payments industry, including working with competitors of eBay. Subsequently, this has been proven correct as PayPal has grown tremendously since the split from eBay.

To minimize the impact on eBay’s operations, at the time of the separation the two companies agreed to a five-year exclusive “Operating Agreement” for most of eBay’s core marketplaces.

However, flying a bit under the radar was a provision in the Operating Agreement terms that eBay could launch its own payment processing service with two years left in the agreement. Probably, very few people expected this to happen as PayPal was so dominant on eBay.

But with just over two years to go in its agreement with PayPal, eBay announced it would launch its own eBay Payments service, later to be called eBay Managed Payments. The company wanted to take better control of the payments process on its core marketplaces while also opening up an additional revenue stream. The core marketplaces being the eBay branded sites such as ebay.com, eBay Motors, and international local sites such as ebay.co.uk and ebay.com.au.

From day one, many sellers felt this was just a move for the company to squeeze out more profit from each sale as its GMV (Gross Merchandise Volume or total sales) on the core marketplaces was not growing at the same rate as many competitors in the online commerce space, including other divisions such as StubHub and the eBay Classifieds Group that it owned back then. Sellers didn’t see how this would benefit them and how it would solve the real problem on eBay, lagging growth in GMV.

eBay also claimed sellers would eventually to accept more payment options and would see a small reduction in fees. Both claims continue to be controversial among some sellers, especially since PayPal has expanded to include many more payment options for its users.

In July of 2018, eBay officially introduced the new payments service by inviting US business sellers to participate in the beta launch. Unfortunately, it became very quickly clear the beta had many restrictions with the biggest one being business sellers opting in would not be able to temporarily accept PayPal payments. To make matters worse, once in, they couldn’t leave the beta. What angered sellers was that eBay was not very upfront about this restriction and the company didn’t offer a timeline when the restriction might change.

Clearly, with most buyers’ mindset being that PayPal is the way to pay on eBay, this would be disastrous to sales. eBay eventually relented and allowed sellers to opt-out of the program and also restored access to PayPal the following year.

But that was not the end of the roll-out problems with eBay Managed Payments. Another big issue was that eBay Managed Payments required sellers to have a bank account and they couldn’t access funds until they transferred the monies to their bank. Many smaller sellers used PayPal as a bank account, which really isn’t a good idea to start with, but it’s what sellers did. More importantly, sellers could immediately use the funds in PayPal to pay for shipping labels, eBay fees and use a PayPal debit card to pay for about any other expense, neither was possible with eBay Managed Payments in the early rollout.

The big problem that eBay didn’t seem to understand with the early launch of eBay Managed Payments was how small sellers used PayPal to run their small business. It was a colossal failure that continues to dog the reputation of the service among many long-time sellers, including gaining the negative nickname as “eBay Mangled Payments.”

There is still no debit card for eBay Managed Payments to allow immediate access to funds and bank transfers appear to take longer than on PayPal.

eBay Will Not Return to PayPal as Its Primary Payment Processor

Today, there are still eBay business sellers that would like to see eBay completely do away with eBay Managed Payments and return to PayPal as its primary payment processor, but that is not a reality.

Whenever a hiccup occurs with eBay Managed Payments, it gets a lot of social media and eBay community forum attention, immediately opening up gripes about existing limitations by comparison to how it was with PayPal.

As more new sellers sign up on eBay that didn’t know the “old way,” the long-time eBay sellers are not doing themselves any favors by continuing to stew on the program. As the Borg used to say in the popular TV show Star Trek, “resistance is futile.”

eBay is doubling down on the service and plans to expand it further and launch new features. Iannone even called it eBay Managed Payments 2.0 at the investor conference. It does appear some of the new features may address existing limitations and complaints and over time should help improve the program’s perception among long-time sellers.

eBay Managed Payments 2021

So far for 2021, eBay announced the service would become available in France, Italy and Spain during the first quarter of this year.

This week’s eBay blog post confirms Iannone’s remarks that it would launch for consumer sellers in 2021, with additional clarification that it will become available to consumers in all countries in which the company operates eBay Managed Payments for business sellers.

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