EBay’s Deal With PayPal Expires Soon. What Does That Mean for Managed Payments—And eBay Sellers?

With the expiration of a major agreement with PayPal Holdings Inc. just a few days away, eBay Inc. is charting a new course in payments. But at least some merchants are hoping the e-commerce giant will address outstanding questions about how payments will be handled in the new era.

According to the latest numbers, eBay has converted some 32,000 merchants to its managed-payments platform, which relies on a gateway from Adyen NV that funnels transactions to a variety of processors, of which PayPal is one. The platform, which is moving into Canada and Australia after launches in the United States, Germany, and the United Kingdom, has processed a total of $3 billion in volume so far.

But a five-year operating agreement between eBay and PayPal, signed July 17, 2015, expires soon, leaving at least some sellers that haven’t transitioned wondering what that means for them, according to a July 11 article  in eCommerceBytes, an online newsletter that closely follows eBay. “Despite the fact that eBay will place many US sellers into its own ‘Managed Payments’ program next week, sellers continue to have questions about how the move will impact them,’” the article says.

Spokespeople at eBay did not respond to queries from Digital Transactions News. According to the terms of the 2015 contract, the relationship can be extended for one-year periods if both parties agree to do so.

San Jose, Calif.-based eBay announced in January 2018 it intended to move away from PayPal for payments, and by September that year it had staffed its managed-payments facility and had started operating it. It said at the time it intended to have “a majority” of its sellers on the new platform by 2021. PayPal, which eBay owned for 13 years before spinning it off in 2015, had long processed transactions for the marketplace.

A June 29 blog post by Alyssa Cutright, a former PayPal and Square Inc. executive who is vice president for global payments at eBay, hints that a major expansion is coming, perhaps in tandem with the moves of managed payments into the new international markets. “[W]e’ve been paced by an agreement with PayPal that governs how quickly we can roll out the experience,” she says in the post. “We’re approaching a milestone this July when that agreement expires—and we are poised to take major steps forward to expand managed payments through the rest of 2020 and beyond.”

The post touts the advantages for sellers of a payments regime controlled in-house, including a “streamlined checkout experience,” a so-called final-value fee that replaces third-party processing fees, and “better visibility into sales and payouts.” Meanwhile, eBay has stressed that sellers should sign up as soon as possible for managed payments. “As we move forward, we expect to manage payments for most sellers in 2020,” reads an FAQ page on the marketplace’s Web site.

But sellers quoted by eCommerceBytes expressed confusion about what would happen if they fail to switch to managed payments by a July deadline set by eBay. “[T]here’s indication many sellers are either waiting until the last minute to register or are refusing to do so,” says the article.