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If you want to initiate a monstrous crap-storm, just mention eBay’s new Managed Payments System on the eBay Community or any social media outlet. You’ll get tons of crusty old eBayer’s claiming that it’s the worst mistake that money-grabbing-eBay has ever made and that they’re boycotting the platform.
So it is true? Is eBay Managed Payments a money-grabbing effort from the massive corporation that hundreds of thousands of people rely on to put food on the table?
Maybe. But now that I’ve actually been on the managed payments system for a while I wanted to write this post to address some concerns, answer some questions and, hopefully, give you a bit of comfort.
How eBay Managed Payments Works: Short Verison
Nearly every platform you sell on manages its own payments. What this means is that, when somebody pays you, the platform processes the payments and you will have a balance on that platform. You can then cash out that balance.
So, for example, you sell a pair of shoes on eBay, the person pays via credit card which is processed by eBay (or actually the processing company they contract with), and you will have a balance show up on your “Payments” section of your Seller Hub. Once this balance is available (usually around 2 business days) you can transfer it to your bank account.
It’s worth mentioning here that eBay’s previous arrangement with PayPal made them a bit of a unicorn. Nearly every selling platform manages payments for sales on their platform. If you sell on Mercari, Poshmark, Etsy, StockX, The RealReal, thredUP, etc. you are not paid instantly. Instead, you have a balance that comes available after a time (commonly, after an item is either shipped or confirmed received).
While I did enjoy that I could get instant access to my funds from eBay sales, I still feel that eBay is still the best place for sellers. For one, they do not require you to ship the item to release the payment. However, because it takes several days to transfer you’ll have to lengthen your handling time significantly if you don’t want to ship until you have funds in your account.
Thinking of diversifying? Find the Best Selling Items on Mercari by clicking here.
After a couple of weeks on the new system, eBay’s Managed Payments is working about how I expected it to. There have been no major hiccups as they’ve scaled the system to 42 million sellers globally (unlike changes they’ve rolled out in the past).
While there are some changes to the fee structure, funding sources, etc. none of them are noticeable enough that they have disrupted the day to day function of my reselling business. Unless you are an outlier in terms of the sales price you probably will notice slight savings and no real drawbacks.
It has been taking one to two days for my funds to come available on the site and then an additional 2 days for them to show up in my bank account (business days, so it takes longer over weekends).
I chose weekly payouts (which are sent on Tuesday) instead of daily payouts and haven’t had issues thus far. Luckily, my eBay store and other businesses cash-flow well enough that I have some flexibility, and the delay in payments doesn’t affect my shipping or sourcing.
If eBay’s Managed Payment system had come out two years ago when I was in a much tougher place financially I would probably have many different feelings about it. If you are on the edge and need your money quickly to pay rent, ship your items, etc. you’ll probably struggle with Managed Payments. However, since it’s inevitable now is the time to make moves to minimize the effect it will have on you and your business.
Should you opt in to eBay’s Managed Payments?
Probably. In the long term, you don’t actually a choice. In my opinion, there really isn’t much value in holding out to the last second to opt-in. Having immediate funds is the only advantage to continue sticking with PayPal. With managed payments, on the other hand, you have everything together in one place with slightly lower fees.
Whether it’s better is debatable but it is what it is and it’s here to stay. The sooner you can master the new system the further ahead you’ll be of everyone else who is dragging their feet.
My take on changes to eBay
If you sell on eBay, change is a constant. People who are successful on eBay are people who can adapt to changes and grow their business in the new soil. Every time there is a major change you have hordes of people claiming that it’s the death of eBay and that they’re done selling on this platform. Well, goodbye.
If you choose to sell on someone else’s platform, you have to play by their rules. If you no longer have what it takes to succeed on eBay, get yourself a carboard box, flip it upside down, and get sell things at a local flea market. Or maybe try building your own website and driving traffic to it so you can learn just how valuable the service eBay provides is.
The reason that eBay is the largest platform for resellers (Amazon doesn’t really count) is that it is the best and most profitable option. eBay is not dying, eBay’s Managed Payments is really not a big deal, and there is still tons of room for growth and success on the platform.
The Cons of eBay’s Managed Payments System
While I don’t hate eBay’s Managed Payment System (I’m pretty ambivalent at this point) there are some things about it that I don’t love (and you might hate):
- Payment isn’t instant. PayPal was great because you’d have your money instantly after a sale. On the new system, you might end up waiting up to a week before money from a sale hits your bank account.
- No PayPal cashback. The 1.5% cashback that I got on my PayPal debit card more than made up for the fee “savings” that I’m supposedly getting on Managed Payments.
- You still get a fee invoice. I wish eBay would follow the example of sites like Mercari and Poshmark and only dispense my earnings. Why would they give me all the money only to ask for some of it back?
- Shipping comes out of your pocket. Since it takes time for the sale money to reach your bank account, you’ll either have to have shipping money on hand or lengthen your shipping time.
- Fees are “per listing.” PayPal charged a single fee per transaction but eBay charges it for every item they process, even if they’re all on the same order. If you sell very low priced items in quantity this will hurt you.
I’m sure there are other sellers who will have a much longer list of cons, but the happy news is that most of these will probably be worked out as eBay rolls the system out to more and more sellers.
Final Thoughts: So is it a money grab?
Yes and no. eBay’s Managed Payments is not simply an effort to squeeze more money out of sellers. Contrary to what seems to be a popular belief on the eBay Community, the way eBay maximizes its profits is by taking care of its sellers.
One of the main aspects of running a successful business is the element of Control. Any large company or corporation wants to do as much in-house as possible. The only reason to outsource is to save money and, in the case of eBay, managing payments in-house will actually increase their profitability while reducing reliance on another company.
So, while eBay is probably seeing dollar signs, it’s not coming at your expense (assuming you’re a seller).
An interesting side-note is that eBay seems to be discouraging drop-shippers and low-value sellers. Most of the Asia-based sellers that sell super-cheap items will be wiped out by the “per-listing fees.” Likewise, most drop-shippers will not have the money to pay for their product upfront and will be unable to continue on the platform. eBay’s new system is the most favorable for sellers who sell single high-value items.
eBay Managed Payments Issues and FAQs
How can I opt-out of or avoid eBay Managed Payments?
You can’t. Just don’t opt-in until the last minute. But it’s coming. You built your castle on someone else’s land and you have to abide by their rules.
Does eBay’s Managed Payments work with PayPal Working Capital?
Not really. While there was supposed to be integration, it never seems to have come to fruition. If you enroll in eBay’s Managed Payments you’ll be breaking your Working Capital contract. Since you don’t have a choice, you’ll be left to make manual payments to avoid going into default.
We currently have a PayPal Working Capital Loan and will be making weekly payments on it. Our fingers are just crossed that PayPal realizes that sellers’ hands are tied and won’t be too cranky about it.
Does eBay Managed Payments Increase Sales?
In theory, it could since it allows a greater range of payment options on-site. However, many people love and trust PayPal and I’ve heard of buyers being turned off by the new options. We haven’t noticed any change in sales.
Is this the beginning of the end for eBay?
According to internet gurus, eBay has been dying for years. Fortunately, someone forgot to tell eBay because they keep growing.
The eBay platform will continue to grow and change but, if this change scares you, take it as a sign that you probably don’t have all your ducks in a row. There are probably other changes in store (higher fees, new seller restrictions, category restrictions, etc.) so be prepared.
Can I sell all the same stuff?
No. There are several categories that are not allowed on the new payments system. If you sell those items, you’ll either have to pivot your business model or find a new platform.
So, at the end of the day: adapt and overcome! Those who are dedicated will continue to succeed and those who whine and bemoan the success of other sellers will continue to suffer.
Useful Links for More Information:
- eBay Managed Payments Official Page
- Managed Payments Review and Q&A
- eBay Managed Payments Fees
- eBay’s Managed Payments on Reddit
- Managed Payments Opt-In