E-commerce behemoth eBay is officially abandoning online payments system PayPal after 15 years, opting for a new service that’s expected to deliver benefits to sellers.
eBay announced that it would stop working with PayPal in 2020 and transition to Adyen, an Amsterdam-based payments company, later that year.
Adyen’s customers include tech industry giants Uber, Netflix, and Spotify.
Adyen primarily provides back-end payments services, like credit card processing, and won’t have a visible presence at the eBay checkout, unlike the “pay with PayPal” button.
eBay users will continue to have the option of using PayPal until 2023, but it will effectively be relegated to “second-class status”.
PayPal has been eBay’s main payments provider since 2003. In the same year, eBay acquired PayPal in a deal valued at $1.5 billion.
eBay and PayPal parted ways in 2015 and become separate public companies, but maintained close business ties.
The announcement that eBay is officially breaking away from PayPal marks the end of one of the tech industry’s “most storied partnerships”.
Why eBay abandoned PayPal
eBay says it’s moving from PayPal to Adyen in order to “improve its customer experience” by intermediating payments on its marketplace.
“In doing so, eBay will manage the payments flow, simplifying the end-to-end experience for buyers and sellers,” the company said in a statement.
It seems that the main motivation for the switch from PayPal to Adyen is enhanced user experience.
eBay says that the ecommerce landscape is becoming increasingly competitive and users expect to be able to both shop and checkout on the site on which they transact.
So rather than completing payments through an external provider like PayPal, eBay wants to keep everything in-house and on-site with Adyen.
Adyen’s service extends to more than 150 currencies and over 200 methods of payments, which provides increased flexibility for eBay users.
What it means for sellers
eBay says that it’s focussed on improving customer experience, but what does the shift to Adyen mean for sellers?
Costs for sellers mostly the same
Under the new 'managed payments' system, sellers pay 12.9% eBay fees per sale + 30 cents, as opposed to the old system where they'd pay 10% eBay fees, 2.9% Paypal fees + 30 cents. So the fees are the same as before on most items, although eBay's cut does change slightly between product categories and may be higher than this.
eBay says sellers will also benefit from a more simplified pricing structure and more predictable access to funds.
A central place to manage business
It sounds as though eBay is working on an integrated business dashboard for sellers to manage all aspects of their online stores in one place.
In a statement, the company said it is “working on solutions to provide sellers with information about their eBay business, inclusive of payments information, in one place so that sellers can easily track and manage all of their transactions and customer interactions on eBay”.
As promised, eBay has been rolling out a range of new tools for sellers, including a new listing tools and the ability to add product videos. The company is continually adding to these to improve sellers' capabilities, so it pays off to keep checking back and making sure you're using functionalities to their full advantage.
Greater reach and more sales
This is a bold claim for eBay to make. But the company believes that the switch to Adyen will allow sellers to “reach more buyers and improve conversion”.
eBay says that offering buyers a greater range of payments options and currencies will allow sellers to reach more potential customers.
Also, having greater flexibility and a more streamlined process at the checkout may reduce cart abandonment rates and increase conversions.
The legitimacy of this claim is yet to be tested, but eBay seems confident that by making shopping easier for buyers, it will make business better for sellers.
PayPal to remain as a payment option
Sellers that rely on PayPal to conduct business on eBay don’t have to worry about being left behind.
PayPal will remain as a payment option on eBay until July 2023, allowing plenty of time for sellers to transition to the new system.
eBay says that “PayPal will remain an important partner”.
It seems that PayPal will continue to have a place on eBay, it will just be less prominent.
Sharing more data
It will be business as usual for sellers on eBay during the transition process.
However, eBay says that sellers should expect to provide them with “some additional payments-related data and transition to a new relationship with eBay that includes integrated payments capabilities”.
New terms, which came into action on 1 June 2021, say the new payment system is compulsory, and that the company has the power to limit or remove listings from sellers who refuse to use it.
This won’t happen immediately, but eBay expects that the transition for sellers will occur prior to July 2021.
With an estimated 25 million sellers on eBay, this transition will take some time to complete.
Reaction to the eBay-PayPal breakup
The move from PayPal to Adyen has, for the most part, been met with uncertainty within the eBay community.
Sellers have shared concerns about eBay potentially taking control of their money, fees, and sharing payments-related data with a foreign company.
The lack of detail in eBay’s public statement seems to have left sellers feeling unsure and concerned about the changes.
It has also given rise to unfounded speculation around eBay’s plans and intentions. However, some eBay users are choosing to “hold off judgement” until more information becomes available.
Alternatives to PayPal on eBay
eBay and PayPal have been joined at the hip for the best part of 15 years. Even when the companies parted ways in 2015, they struck a deal that required eBay to conduct 80% of transactions via PayPal.
In the same year, eBay also told sellers that they would no longer be able to use alternative payment processing services Skrill (formerly Moneybookers), ProPay, and Paymate.
This is why the announcement that eBay is breaking away from PayPal is so significant and, perhaps, why many sellers are upset about it.
PayPal is familiar and reliable.
Sellers don’t have to abandon PayPal on eBay as the service will still be available until at least July 2023.
For those who want to try an alternative to PayPal on eBay, there isn’t much to choose from.
eBay says that it allows:
- Credit and debit card transfers
- Payment upon pickup
It restricts access to:
- Bank-to-bank transfers (bank wire transfers and bank cash transfers)
- Money orders
- Online payment services: Allpay.net, CertaPay, hyperwallet.com, Fiserv, Nochex.com, XOOM
However, there are very few verified reviews of these alternative services online, suggesting that most sellers have been opting for PayPal.
Also, some of these alternative online services are restricted to specific countries. For example Allpay.net only works in the United Kingdom and parts of Europe, and CertaPay is only available in Canada.
The news that Adyen’s service extends to more than 200 payment methods could mean that eBay is about to become more flexible for buyers and sellers.
Frequently Asked Questions
It can be! It is a multi billion dollar industry estimated to be worth over 266 billion by 2027 so there is absolutely room to tap into the market and make a profit.
Yes, as of 2023, eBay accepts PayPal and you can use it to pay for your items on eBay. To pay with PayPal, all you have to do is select PayPal as your payment method at checkout and enter your account information. You can use PayPal to pay for eBay items as a member or guest.
On eBay, different categories affect the type of payment that is accepted. Generally, in most categories, credit cards, debit cards, Apple Pay, Google Pay, and PayPal are accepted and checks, money orders, and bank wire transfers aren’t allowed for most eBay purchases.