ChannelReply Blog

Should You Opt In to eBay-Managed Payments?

Published at Oct 19, 2018.

Opting in to eBay-managed payments could boost your profits—or destroy your business.

eBay launched this new payments program on September 25, 2018. They only invited a limited number of sellers to opt in, but they processed over $20 million for those sellers in the first 21 days. 

Responses from sellers have been mixed.

eBay says managed payments will be the default system by 2021. With the old PayPal-based system dying, sellers must prepare for the switch. But what exactly does that mean? And how will it affect your business if you opt in—or get dragged kicking and screaming?

Last updated 3/23/2020.

What Are eBay-Managed Payments?

eBay-Managed Payments

While divorcing from PayPal, eBay is gradually switching over to Adyen, the payments processor used by Uber and Spotify. Adyen will be more or less invisible to sellers and buyers alike. Instead of dealing with a separate payment interface like they do with PayPal, buyers will just choose from a list of payment options like Mastercard and Visa.

This is a huge improvement. The buyer has fewer hoops to jump through, which should mean more conversions for eBay over time. But there are… problems.

What Are the Downsides?

Bubble Gum Stuck to Shoe

1. Higher Fees for Some Sellers

PayPal usually charges 2.9% + $0.30 per transaction. eBay will charge 2.7% + $0.25 per listing sold. 

On first glance, that looks great! But the difference between "per transaction" and "per listing" is enormous.

If you tend to sell one item to each customer, it's way better to go with eBay than PayPal. You'll save 0.2% and $0.05 on each sale. If you make $4,000 of eBay sales per month, spread out across 100 items, switching to managed payments would net you an extra $13 a month in pure profit.

However, it's dangerous if you often sell multiple items at a time. Let's say that on average, you sell two items per transaction, each priced at $10. You'd pay PayPal $0.88 per transaction. You'd pay eBay $1.04. That's an 18% increase in fees!

If your buyers tend to order multiple items in each purchase, stick to PayPal as long as you can.

2. Major Limitations for International Sales

Guy with Stop Sign

Believe it or not, for the time being, you may be unable to use the Global Shipping Program if you use managed payments. It's only being rolled out now in 2020, over a year after launch.

You’ll also lose the ability to make many international shipments on your own. Whether or not you use the Global Shipping program, you’ll only be able to sell internationally if the buyer purchases from you on eBay.com. You’ll be unable to sell on eBay sites other than eBay.com (so no eBay.de, eBay.it, etc.) or promote listings internationally.

So, if you rely heavily on international sales, you might want to stick with the old payments system for now.

3. Other Temporary Limitations

  • No eBay Authenticate.
  • No eBay for Charity.
  • No exchanges or replacements.

Why Would I Want to Use Managed Payments?

Believe it or not, even with all those significant problems, you may still want to opt in! The upsides are just as big as the downsides.

1. Lower Fees for Many Sellers

Guy with Stop Sign

As discussed under "Higher Fees for Some Sellers" above, eBay's fees are lower than PayPal's in many cases. Managed payments will always save you money if you only sell one item in each transaction.

2. An Easy Way to Accept Credit & Debit

In October 2018, eBay disabled standard credit & debit processing for sellers who hadn't already set it up. You can still accept all kinds of cards through PayPal:

However, there's only one way to accept debit cards other than those above: opting in to managed payments.

That's not all bad. Previously, accepting credit and debit cards required all kinds of hoop-jumping. You needed fancy stuff like a merchant account and a payment gateway.

Opting in means eBay takes care of all the old hoops and will let you process credit and debit cards painlessly. They'll deposit your money directly into your checking account, initiating the transaction within two days of the buyer making the payment.

3. More Payment Methods

Originally, limited payment options were a major issue. Sellers who opted in could not accept PayPal (!) until April 2019 or later. This was a huge problem for many long months, but now, things have improved vastly.

You can accept the following payment methods using managed payments:

  • PayPal & PayPal Credit.
  • Credit & debit.
  • Gift cards.
  • Apple Pay.
  • Google Pay.

The last two—Apple Pay and Google Pay—are only available to sellers who opt in.

You'll also continue to have access to other standard payment options, like cash on pickup.

4. Lower Buyer Reluctance

Abandoned Cart

We covered this above, but it’s worth mentioning again. New buyers will be able to use their cards and skip the process of creating a PayPal account. This could make a big difference in converting first-time eBay shoppers to buyers.

5. Simpler Payments and Dispute Resolution

No more logging in to PayPal or moving money around. You’ll manage it all in one place: eBay. It’s like ChannelReply, but for payments instead of messaging.

Managed payments should also save you from dealing with the complex relationship of PayPal Purchase Protection and the eBay Money Back Guarantee. That’s a relief!

How Do I Get Invited?

Invitation

You’ll undoubtedly have the option to start using managed payments sometime between now and 2022. Currently, they're inviting users "when [they] can register." You can also express your interest here.

From what they’ve shared, it looks like they’re only inviting businesses that should benefit from making the switch. They most likely won’t send you an invitation yet if you do a lot of business internationally.

Is It Worth Making the Switch?

eBay has shared the story of one seller who has succeeded with managed payments. The seller, Danny Hone, reported an instant 33% boost to sales and calculates he’ll save $1,500 per year on fees.

Of course, eBay would only pick the best stories to share, so don’t assume you’ll see the same dramatic results. Remember that some sellers will pay higher fees.

eBay’s managed payments could have huge benefits for some sellers, even with its current downsides. But if it’s a bad match for your business, it could be catastrophic. Weigh the pros and cons carefully before you opt in.

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