Ebay’s Payments Partnership with PayPal on its Dying Embers: What Next for Merchants?

Friday, August 7th, 2020

eBay and PayPal had a significant payment agreement in 2015 which is about to expire. In the past, PayPal has been the chief payment processor for the Ecommerce firm—for several years. And merchants are raising concerns about how payment processing will happen in the future.

eBay estimates that more than 31,000 traders are currently utilizing a managed-payment service that uses a gateway in Nevada to direct transactions to various payment processors, including PayPal. The managed payments platform was initiated in the US, UK, and Germany but is now expanding to other countries like Canada.

So far, the service has handled a sum of 3 billion dollars in five years since its inception. However, the initial agreement ends soon, and it comes with worries to some traders. eBay stated that it would transfer most of its US traders to its payment management system, but some merchants wonder how this change will affect them.

Although the initial agreement has leeway for contract extensions, eBay has not been forthcoming on whether the relationship can continue for one more year. In 2018, the eBay branch located in California announced that it would be phasing out PayPal payments.

By September 2018, the branch had set up and initiated its managed-payment service. During this initial phase, eBay envisioned to transfer a bulk of its merchants to this service before 2021.

In the past, PayPal owned the ecommerce giant and hence handled the processing of payments on behalf of eBay. However, eBay later became a separate entity when it stood out as an independent firm in 2015.

Ebay Drumming Up Support for Its New In-House Payment Processing Platform

In late June, eBay’s VP in global payments implied that the firm is preparing for large-scale expansion. The expansion will probably run concurrently with extending their managed payments platform to present and new locations.

eBay has also hinted that its new payment management platform will come with several benefits that merchants will enjoy once they enroll.

The platform boasts a simplified checkout experience that replaces third-party processing charges and provides better visibility during transactions.

eBay is advising its traders to apply promptly and join their payment management platform. The ecommerce firm has indicated it plans to handle most financial operations in the future using its in-house managed payment service.

In short:

The eBay and PayPal payment processing agreement is coming to an end soon. eBay is changing the management of payments from third-party firms such as PayPal to its internal payment processing platform. The ecommerce giant is urging its traders to join this new service to enjoy several benefits.