eBay and PayPal break up
After nearly two decades together, eBay and PayPal are finally calling it quits. While this doesn’t come as a surprise for many of eBay’s loyal users (more on this later), PayPal has been one of eBay’s main payment methods for as long as anyone can remember. This just goes to show that sometimes, even the longest-running of partnerships can come to an end.
The two companies got together back in 2002, just a few months after PayPal went public. eBay made waves back then by coming out with a statement that it had acquired the online payment company for $1.5 billion and that it would be using the company’s services to facilitate payments for both online sellers and buyers on the platform. Because PayPal had gone under its wing, eBay also decided to phase out its own payment service—eBay Payments. This makes sense, as eBay auctions were one of the main drivers for PayPal during its early days.
The breakup was discreet. One would need to read eBay’s terms of service to discover that eBay and PayPal are no longer going to be working together. According to the updated terms of service, sellers would no longer be receiving funds through their PayPal account. That means that sellers would need to provide eBay with their bank account in order to get paid for their products and services.
While this is certainly the end of an era, the eBay-Paypal breakup may lead to smaller cuts taken from sellers. eBay now says that sellers can now get their money without the use of third-party platforms, which means they wouldn’t have to pay the standard processing fees that come with such platforms. However, eBay will be imposing a new standard processing fee of $0.30 for all sales, and they will be taking a small percentage of the overall amount of the sale. Still, eBay promises that what they get will still be considerably smaller than the 13% cut that got deducted from sellers prior to the eBay-PayPal breakup.
eBay created a page on their website explaining this new payment scheme. According to the bidding company, they will roll out and implement the new changes in phases. While some sellers are being told to submit their bank details in lieu of their PayPal accounts by June 1, others say that eBay has told them to stand by to get their communications before the year ends.
PayPal became independent of eBay back in 2015, and they had agreed that PayPal would keep facilitating payments for five years. Those five years would also act as a transitional period for eBay to find a new way to manage payments. eBay certainly put that time to good use by developing an eBay-owned payment management system that would eliminate the need for third-party platforms. eBay rolled out the beta versions of its in-house payment processor back in 2018 and was able to refine the technology as the years passed. In 2020, eBay said that they were able to integrate 340,000 sellers into their new payment platform, showing that it’s feasible for all sellers to do so.
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