eBay announced they have renegotiated their deal with PayPal and extended their relationship to 2023. The original agreement after the eBay/PayPal split was scheduled to end in 2020.
However, as part of the new deal with PayPal, eBay no longer is required to use PayPal as their exclusive payment processor.
The company announced they reached a new long-term deal with global payment processing firm Adyen to offer payment processing of purchases on eBay. PayPal’s payment processing service will still be an option on eBay but will become an off-site transaction.
“eBay intends to further improve the customer experience by intermediating payments on the Marketplace platform. In doing so, eBay will manage the payments flow, simplifying the end-to-end experience for both buyers and sellers. We have signed an agreement with Adyen, a leading global payments processor, to become our primary payments processing partner. PayPal, a long-time eBay partner, will be a payments option at checkout for eBay buyers.”
In the second half of 2018, North American buyers will see an option to pick either eBay on-site payment processing or PayPal off-site processing.
Following the terms of the original operating agreement with PayPal, eBay will expand the new payment option in 2019 and expects that by 2021 Adyen will process most marketplace transactions globally.
Adyen is a Dutch based back office payment processor. The company is not starting a digital wallet system, and the experience on eBay is anticipated to be more like a typical eCommerce checkout.
Payment, billing, and shipping details will be managed by eBay, and Adyen will handle the actual payment processing. eBay also claims sellers should expect a simplified pricing structure and lower payment processing costs.
“Payments intermediation will bring significant benefits for eBay sellers. All sellers can expect a simplified pricing structure and more predictable access to funds, and most can expect their costs of payments processing to be reduced after they transition to eBay’s intermediated payments model. We’re also working on ways to provide sellers a central place to track and manage their business, inclusive of payments information.”
It is also assumed that eBay will receive a percentage of the payments processed by Adyen, adding to its revenue stream.
For Adyen, this represents a considerable impact on revenues. For comparison, in 2016 Adyen had revenues of $178 million while PayPal revenues topped $11 billion.
Some analysts believe eBay may take a stake in Adyen or entirely purchase the company sometime later. eBay had no comment on this speculation.
Spring Seller Update Should be Interesting
This announcement comes about three weeks before the typical time frame when eBay announced changes for its sellers in the annual Spring Seller Update.
For more extensive policy or operational changes, eBay typically provides sellers about 4 to 6 months of lead time. This also helps third-party marketplace solutions to adjust to new API hooks.
Assuming the company wants this integration fully operational for the 2018 holiday season, it is reasonable to expect the Spring Seller Update will provide more details on the new payment processing option and how it may impact sellers.
However, the company stated: “Sellers do not need to take any action at this time. The transition to full payments intermediation will be a multi-year journey.”
Currently, most seller protection policies by eBay are the same as offered by PayPal. With a change in processors, this could change. There could also be changes on how disputes are handled and a change in threshold for obtaining signatures on deliveries.
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