eBay managed payments

eBay managed payments: the ultimate guide

The checkout can be a thorny issue for online retailers, with many shoppers dropping off just when they’re about to pull out their credit card. With eBay managed payments, customers will be able to complete their purchase without being sent to PayPal.

This is surely a good thing, but there’s a lot more to eBay managed payments than that!

Whether you’re making the transition to eBay managed payments now, or contemplating what’s coming, we take a deep dive into what it means for eBay sellers.

What is eBay managed payments?

eBay managed payments is the marketplace’s in-house system to process payments for buyers and sellers.

Announced back in 2018, eBay says the introduction of this simplified payment system will make life easier for all its users.

eBay previously depended on PayPal to process its payments. Back in 2002, it acquired PayPal, before parting ways in 2015.

The marketplace is currently inviting sellers to join eBay managed payments and by 2021, this will become mandatory for the majority of accounts.

PayPal has a trusted reputation, but it required people to leave eBay to complete a purchase. Now, eBay managed payments will eliminate this extra step as well as offering a variety of payment methods to buyers.

eBay managed payments review

eBay managed payments has been rolled out to some sellers gradually over the past couple of years. This was a smart move because eBay’s already made dozens of changes in response to their feedback.

Even now, the system is still in beta and may continue to change. But a lot of problems which had sellers up in arms are already fixed.

You may have heard complaints about the fact that eBay managed payments doesn’t:

  • Offer an API
  • Facilitate PayPal
  • Support charities and donations
  • Work for international shipping

But you can rest assured that these issues are no longer a problem. So let’s take a look at the pros and cons of the system as it currently stands.

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

eBay now offers multiple payment options to meet modern customer expectations and increase eBay sales. Credit card, debit card, gift cards, Google Pay, Apple Pay, Paypal and PayPal Credit are all accepted.

Mobile payment options

Mobile friendly options with eBay managed payments will make a big difference for buyers and sellers alike. 43% of US eCommerce sales are expected to take place on mobile this year, so it’s a timely improvement. Undoubtedly, eBay’s 66 million monthly app users will be happy with the new payment system. Shoppers can even save their card information for easy 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.

eBay and PayPal
Before eBay managed payments, shoppers were sent off to complete their purchase on PayPal.

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.

How to get started with eBay managed payments

Eventually, all sellers will have to use eBay managed payments if they want to sell on the marketplace. Luckily, getting set up is simple.

Registering for eBay managed payments

eBay plans to introduce its managed payments system to most sellers by the end of July 2020.

If you’ve received a notification to register, you should do it here before July 15th to ensure your sales aren’t disrupted at the end of the month.

Check your email or the ‘My Messages’ section of your account to see if you’ve received a notification. If you haven’t, no action is required. (It’s a good idea to check you’re signed up for emails from eBay to make sure you didn’t miss a notification.)

If you would like to move over to the new system and haven’t received an invite, you can request one here.

Getting set up

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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