My Experience on eBay Managed Payments: Did I get scammed?

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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. I can guarantee that 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.

*In fact, since publishing this post we’ve gotten several emails per week saying that we are idiots that don’t know anything about business and we’re probably eBay pawns*

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. After all, an objective review of eBay’s managed payments system is hard to find.

But here’s another thought for you, does it matter if eBay made the switch to make money? They are the largest selling platform on their type online and aren’t giving you options. You don’t negotiate with eBay. They are telling you to use their payment system and you can switch or move on. The questions is, where would you go?

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.

My Experience:

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 with 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. eBay is claiming that this way is simpler and saves people money. I’m not sure of either. Personally, our fees are marginally higher with eBay’s managed payments system.

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 and, if eBay is to be believed, 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. At least you do if you ship via UPS or FedEx. Your selling and store fees will be taken by eBay before they pay you.
  • 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.
  • When you have a return, the funds are automatically withheld from the amount that eBay will be paying you. If you have been already been paid and the amount owed to you is $0 then your balance will go negative. You won’t be paid again until your account is positive (by making more sales).

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.

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18 thoughts on “My Experience on eBay Managed Payments: Did I get scammed?”

  1. There are some good points here and shared truths. It may be their castle but one should always remember their success is tied to providing a public service or value to their users. If sellers drop off in droves, it doesn’t matter that they make the rules, they will wither. I’m sure they have continued to grow but I think that growth is masked in porking the seller. You can see a rise in revenue and a reduction in sellers and I think that has been happening unless there is data to say otherwise.

    The categories in which I buy are considered second hand collector items. As such, I have seen a continual reduction in availability over the years. Things in circulation new at times that I use to see 30-50 sellers now only have 12-14 sellers or less. Due to increased fee’s and fee per item plus the platform failing to resist online sales taxes, it all but crushed competition for sellers. Item prices are up to prevent negative net sales but now nothing moves because the pricing is now higher than people can buy on competitor or direct sourcing sites for certain categories which makes it impossible to compete. People go to eBay for deals and savings. If I can buy an item on a direct sourcing site for $8.99 shipped that on eBay is now $12 to prevent a negative net on the sellers end due to fee’s, eBay expecting free shipping to compete even though it’s not their inventory and now expected taxes on the buyer end affecting what they consider the final price, it’s lose lose for the seller. Many times myself I have added an item to cart to realize after taxes it’s way cheaper to buy on competitor sites or better yet FB markets which are poised to knock eBay off their high horse as it cuts them out altogether and puts sales through PayPal directly in the sellers pocket. These groups continue to grow and organize by specific categories for trade and hobby. I think eBay is being close minded and really doing a disservice to their sellers which is their only true source of income.

    Just my two cents after selling for 20 years. Maybe I’m just one of those salty sellers and you’re right that it’s their yard. I have ended my account after two decades of value because I feel the margins no longer cultivate a profitable atmosphere. Maybe the truth is that certain categories just die off and eBay loses the secondhand market going new items only but Amazon owns that market and eBay will never catch it IMO as they don’t own their inventory…their sellers do. They seem to forget that.

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    • I was also just a small store seller for a couple years and I enjoyed it until the manage payments and now I quit my store too because not everybody wants their money to go into it a checking account that’s the whole point of selling privately. Not everybody has a checking account some people get garnished out of their checking account and if you go into the negative because the refunds then you have overdraft fees at the bank none of that seems fair. I’ll just sell my stuff on Facebook.

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  2. Well my gripe is, I spent years developing a relationship with PayPal and it’s working capital program, at my peak I could borrow over 180k since the MP rollout the approvals shrank to 15K to 0 as PayPal will not recognize EBay sales for the algorithm , so as of dec 25th 2020 still have not opted in nor been forced in , as with life we start new relationships , start over and reinvent ourselves to succeed , sucks but I have no choice PayPal has closed its door on me, EBay has one open, so I have to make the best of it

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  3. Seth,

    I am as well one of those old crusty sellers that started back in 6/2000.

    I guess not having access to my funds to ship items is a bad thing. I should keep a bank account for eBay only now. I trust PayPal, not eBay. Ebay has been know many times over to hose there sellers at every turn. You may call it changes for the better but most sellers do not agree with you. I am thinking of selling my items on face book now. The reduction of the 13 % fees with eBay and PayPal, down to just pay pals fees is a lot cheaper then eBay and the poorly managed payments. If they could not compete with PayPal then maybe they should not have sold them. The sellers should have had an option to what banking service that they wanted to use. Its not a good business idea to drive away sales. What you are also missing in your article is the categories that eBay is eliminating due to the managed payment system. Adult material, coins, and vehicles.

    That sure looks like they are putting all of those sellers out of business, with this managed payments.

    I am very disgusted on the complete lack of options for sellers to chose there payment format. Ebay preaches that the buyers have more options to pay, Correct? But the sellers have no choice. This move reminds me of how arrogant Toys r Us was…were are they now.

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    • Thank you for sharing. Haven’t made up my mind about what I am going to do. Caught…but found some insight in your words. Again Thanks!

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    • With you too I agree with you too I was a seller and I close my store. I trust PayPal and I don’t like the fact that you have to ship your items and hope to God eBay pays you. I also don’t like the fact that they have access to deduct from your checking if there’s a refund what if you don’t have enough in there and you weren’t expecting to give a refund and then before you know it you’re overdrafted at the bank? EBay eBay is not going to pay your overdraft fees. Also what about people that don’t want to checking account or can’t get a checking account or what if they have garnishments and you never see your money I think they’re going to be very disappointed in how many people quit buying and quit selling on their platform even though they think they’re growing eventually people get pissed off like they did Walmart and just find another alternative and there’s always other alternatives.

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  4. 100% agree, ebay has taken away a sellers right to choose the payment options. I remember when I received checks, cash folded in foil, etc. Sellers have a right to accept any form of payment they want in my opinion. However, we are playing in someone else’s sand box, so I will play by their rules until I build elsewhere. I also am slowly moving over to FB, I have noticed the amount of savings in the summer months (I sell a lot more locally through fb & back off ebay & this is when I see the most growth). Guess for now I will play in many sandboxes until I find the one that suits me best for the future.

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  5. In my opinion, it is a way to suck the 6% PayPal fee over to e Bay. eBay can increase the “savings” incrementally until they are at 6% + 10% or even higher….in the future. What eBay should have done is delayed the roll out until this pandemic is over and the nightmare of 30 day deliveries for 2-3 day Priority Mail’s has ended. I am getting weekly cases “not received item”. I’ve seen no correspondence from eBay to find a solution to all the open not received cases.

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  6. This article confirms. You guys are clueless! MP is a mega disaster and selling fees on tax and shipments is as well showing what this company is about. There are hundreds of sellers with their money stuck in nowhere land and the transparency of process and transactions on the eBay account is like my dog doing the bookkeeping. Anyways, I made my peace and after 25 years I cancelled all my auctions and am done with this platform. There would be a huge clientele if someone would launch a platform going back to the origins of eBay. They would rocket launch for sure.

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  7. Ebay was started in the age of peer to peer technology, and was simply a gateway to linking people. Yes they used auction fees to make money to create and maintain the platform, but the transactions were between the users. Ebay stuffed itself further and further middlemanning transactions so far as to one day require paypal and then be forced to sell paypal for monopoly sake, but are now trying a monopoly over financial control again.

    The sad fact is that ebay doesn’t care about its users, only their money and control. Ebay is forcing American businesses to deal solely with foreign financial companies and that is closing in on treason. Americans should never be forced to deal with non American middlemen, or have to deal with any non American financial companies, especially when selling to other Americans in Federal Reserve notes.

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    • I do agree that eBay does not care about its users. I’ve been telling people for years that it’s foolish to have all your eggs in the eBay-basket. My approach is simply to make as much money off of eBay while I can and, when the situation becomes untenable, move on.

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  8. I tried to list an Indian Head penny on eBay yesterday (23 year member) and was
    told I could not list it because of the managed payment system…yet there were over 30,000 listings of Indian Head pennies currently on the sight….Doesn’t make sense…

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  9. The inability to list graded coins is head scratcher for me. Graded cards, comics, video games etc are ok, but graded coins are somehow illegal and bad even when graded by the same outfits.

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  10. I would prefer they allow me to keep my selling money with eBay and use it toward future purchases. Instead, they are trying to force me to link my bank account which gives them the ability to credit or debit said account. I only sell a handful of items per year and can certainly see why large sellers would not like this bad eBay decision. I have called them twice about my preference and the phone reps are clueless, have to put me on hold and seek peer advise. Since I still have not added a bank account they have restricted my account and won’t let me sell. 20 years, over 625 FB, and never any cases or negative reviews yet now I’m restricted. Seems they are out of touch with their sellers.

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  11. I too am a “crusty old ebay user”, dating from 1998. I’ve never sold a whole lot there, but this is going to drive me out from selling.

    I never was happy about their insistence on using PayPal – PP is the “devil” as far as I’m concerned, but it did work. I’d rather get a PMO or check in the mail. But eBay’s new system insists on having access to my bank account: Not only NO, but HELL NO! PP encouraged it, but didn’t insist on it.

    I’ll probably just re-list my few items on Etsy – although they suck, they do use PP, so I don’t have to give anyone my bank account information. I utterly refuse to have anything whatsoever to do with Facebook or their many other “digital properties”.

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  12. I agree with you every time you call eBay the people that answer the phone don’t seem like you’re speak English right and don’t understand your problem. I went online to close my store after 2 years because of manage payments and I couldn’t get it shut it wouldn’t work and so I called five times to see if they would help me and so far there’s been no help and I tell you what I took every item singly and took it off of sale so I have no items and if they think I’m paying a monthly fee for no items they can forget it because my PayPal account is going to be empty for them. I surely don’t trust him to have access to my real bank account and overdraft me no way if they can’t even help me close the store there’s no damn way they’re going to get access to my real accounts.

    Reply

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