EBay Inc. on Tuesday announced it has “begun managing payments” on its massive marketplace and said it expects to have a “majority” of sellers converted to the new program by 2021.
Under the new payments regime, sellers will encounter lower transaction costs, eBay’s announcement said, though it did not offer details. It also said merchants can expect consolidated billing and centralized customer service as well as an array of new payment methods. Yet another offering will be direct payments of sales proceeds to merchants’ bank accounts, an arrangement that takes the place of intermediation by PayPal Holdings Inc.
Luria: “EBay is not replacing PayPal with Adyen or another payment provider, they are taking over the management (and economics) of the payments service and utilizing payments providers as a vendor, not a partner.”
Tuesday’s notice follows months of quiet work by eBay following its decision in January to sever its longstanding management agreement with PayPal for payments services. With that decision, eBay contracted with Adyen, a Netherlands-based gateway with U.S. operations based in San Francisco, to handle back-end processing for a wide range of payment methods and relegated PayPal to the role of one of those available payment choices. The original agreement with PayPal, struck in 2015 when eBay spun off the payments company, doesn’t expire until July 2020. Ebay owned PayPal for 13 years.
“The introduction of eBay’s new payments experience in the U.S. marks a significant milestone in our managed- payments journey,” said Steve Fisher, senior vice president of payments at eBay, in a statement. “In less than eight months since announcing our initiative, we’ve moved rapidly to build our back-end payments platform, engage thoughtfully with our seller community to solicit their input and line up new forms of payment—all of which has led to the introduction of managed payments. Looking ahead to 2019, we will expand our new experience to more buyers and sellers in the U.S. and begin rolling out our new payments experience outside the U.S.”
The new moves follow eBay’s decision in July to add Apple Pay as a payment choice and Square Capital for merchant funding.
Ebay’s decision to manage its own payments flows involves a lengthy and complex process of disentangling itself from existing arrangements—particularly that with PayPal—and establishing new relationships with vendors like Adyen that leave eBay as the responsible party. That process will take time, observers say.
“The key to this announcement [on Tuesday] is that eBay will own the payment experience going forward,” says Gil Luria, an analyst at Great Falls, Mont.-based boutique investment firm D.A. Davidson & Co., in an email message. “EBay is not replacing PayPal with Adyen or another payment provider, they are taking over the management (and economics) of the payments service and utilizing payments providers as a vendor, not a partner. The transition will not happen overnight.”
That is particularly when it comes to the deliberate pace at which eBay is moving merchants to the new platform. The company “does not want to disrupt seller activity on its platform, so they are likely to start with new sellers and gradually migrate existing sellers to their own payments experience,” Luria says.
EBay has built an experienced payments team that includes not only Fisher but also vice president of payments Alyssia Cutright, a former Square and PayPal executive, and vice president of risk management Yvette Bohanan, formerly with Alphabet Inc.’s Google unit.This post was originally published here