What are eBay managed payments?


For online shops, the checkout may be a difficult subject, with many customers abandoning their carts just as they are ready to pull out their credit card. Customers will be able to finish their purchases without having to go via PayPal with eBay handled payments.

This is unquestionably beneficial, however eBay controlled payments encompass far more than that! We take a deep dive into what it means for eBay sellers, whether you’re making the switch to eBay managed payments now or thinking about it in the future.

What Are eBay-Managed Payments?

Manage eBay Payments

eBay is progressively transitioning away from PayPal and toward Adyen, the payments processor used by Uber and Spotify. Adyen will be virtually unnoticed by both merchants and buyers. Buyers will choose from a list of payment alternatives such as Mastercard and Visa rather than dealing with a separate payment interface like they do with PayPal.

This is a major step forward. The buyer will have to go through fewer hoops, which should result in more conversions for eBay in the long run. However, the transition has resulted in… issues.

The advantages of eBay managed payments

eBay is using Adyen to create its new system. This platform already supports payments for big names like Etsy, Shopify, Uber and Booking.com, so it has a strong track record. What other benefits does eBay managed payments bring to the table?

Buyer convenience

To satisfy modern customer expectations and enhance eBay sales, eBay now offers a variety of payment choices. Credit, debit, and gift cards, as well as Google Pay, Apple Pay, Paypal, and PayPal Credit, are all accepted.

Options for mobile payments

Buyers and sellers would benefit greatly from mobile-friendly choices with eBay handled payments. This year, mobile is predicted to account for 43% of US eCommerce sales, so it’s a welcome development. The new payment approach will undoubtedly please eBay’s 66 million monthly app users. Customers can also keep their credit card details for future use.

Better conversion rate

Payment experience significantly impacts shopping cart abandonment. In fact, one recent survey revealed three reasons a bad checkout experience causes cart abandonment:

  • 21% of people abandon their cart when the checkout process is too complicated
  • 17% do so when they don’t trust a site with their credit card information
  • 6% leave if there aren’t enough payment methods

Every positive improvement to the checkout experience has a huge impact on your overall conversion rate.

A consolidated system

Managing all your payments in one place should simplify your store’s accounting and reporting. According to eBay, the system was designed to facilitate convenient reconciliation.

Streamlined claims

All customer disputes will be handled directly by eBay – there’ll be no more jumping between PayPal and eBay to settle an order claim. All your refunds, returns, fees, labels, tax documents and payment scheduling will be done from here too.

Automatic payments

One big difference between eBay managed payments and PayPal is the ability to schedule payments straight to your bank account as often as you like.

The disadvantages of eBay managed payments

eBay has been quick to fix many issues with managed payments, but there are still some changes that sellers might struggle with. It looks like these particular pain points are here to stay.

Cash flow complications

Once eBay lists an order as ‘awaiting shipment’, sellers need to send it out. However, this update comes through when payment is approved – not when the funds enter your account.

For some sellers, slow payouts were causing cash flow issues. In response, eBay has shortened its processing times and says payments will be in your account within two business days of order confirmation. It is also allowing sellers to pay for shipping labels out of their pending payments.

However, this is a step down from the same-day access to funds many sellers were accustomed to with PayPal.

Listing restrictions

It’s also worth noting that sellers using eBay managed payments cannot list certain items. Though eBay plans to facilitate payments for restricted items like coins, vehicles and wine eventually, this may limit the listings of some sellers for the foreseeable future.

More teething problems are likely to appear as eBay completes its roll out across marketplaces, but hopefully it will continue to be responsive to seller input.

eBay managed payments fees

To date, there’s been some confusion around eBay managed payments fees.  PayPal charged sellers 2.9% of the total order cost, as well as 30 cents on each transaction. Initially, eBay managed payments fees followed the same structure but charged less. But this is set to change from July 2020.

eBay plans to make its payment processing fees part of a seller’s Final Value Fee. For most categories this fee came in at 10%, plus payment fees. Now, this is how the new fees break down:

  • Sellers with no store or a starter store will now pay 12.35% on orders, as well as 30 cents per transaction
  • Sellers with an a basic, premium or enterprise store will pay 11.5% on orders in most categories, as well as 30 cents per transaction

This new structure makes it difficult to compare eBay managed payment fees with PayPal’s payment fees.

According to eBay, most sellers should save money when switching to managed payments. Nevertheless, it’s a good idea for sellers to recalculate their net margin before switching over.

Some eBay sellers aren’t happy with the new announcement as eBay now plans to charge its Final Value Fee on an order’s sales tax. In response to seller questions, an eBay team member offered this example to help people understand the new fees.

In situations where an order or item is cancelled or refunded, sellers will get their Final Value Fee back, but not their 30 cents order fee. All these charges will appear together on your monthly invoice.

Final Thoughts

After setting up eBay managed payments, all existing listings will automatically be updated to tell your customers how they can pay. So you don’t need to worry about that.

In the meantime, eBay asks that sellers don’t refer to payment methods in their listing descriptions to avoid buyer confusion.

You don’t have to sign up to a platform – everything happens within eBay. To move over to the new payment system, you simply verify your business information and add your bank account details. You can then track the progress of your registration in the ‘Payments’ section of your Seller Hub.

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