Basically, eBay managed payments is a centralized platform that processes payments; sellers can cash out of their payment balances according to a predetermined schedule.
The stated intent of eBay managed payments is to provide sellers “one place to sell and get paid, and buyers more ways to pay.” The program replaced PayPay in 2018, purportedly to enhance the buying and selling experience and provide:
A more flexible and simpler checkout, with more payment options, including mobile—credit, debit, and gift cards; Apple Pay, Google Pay, PayPal, and PayPal Credit.
No separate Paypal account required for buyers or sellers.
Direct payouts to seller bank accounts on a daily or weekly basis; payout initiated during the business week within two days of order confirmation.
Easily ship internationally via eBay’s Global Shipping Program, which handles customs paperwork and import fees.
Support for charity direct sellers and donations.
Unique order numbers.
Option to pay for shipping labels from funds awaiting payment or PayPal.
Convenient easy access to customized reports, refunds, and returns, labels, tax documents. updated reports available from Seller Hub for download or export.
According to eBay, at the end of 3Q 2020, more than 340,000 sellers used managed payments, 20 percent of on-platform volume. The program is expanding to sellers in Greater China in April 2021. The intent is to further expand the program internationally in 2021 and complete full-roll out in 2022.
Of course, there are fees for this service, though eBay claims the potential for increased sales because buyers now have the convenience of a greater range of payment options.
Potential Drawbacks of eBay Managed Payments
Perhaps the most important disadvantage of managed payments is that if you are going to sell on eBay, you are going to use managed payments—there’s no opt-out. Some eBay sellers take affront to being forced to use it, but if you want to sell on eBay, you have to abide by its rules. Also, eBay is actually playing catch-up here. Other platforms—Etsy, Poshmark, Mercari, to name a few—manage payments to their sellers in much the same way.
The other biggie is that you don’t get paid instantly, as you would using PayPal. Expect one to two days before funds in your balance are available. Add another couple of days before they arrive in your bank account.
Other Potential Impacts to Your Cash Flow
There are other cost disadvantages to eBay managed payments that potentially affect your cash flow. Since you are no longer using PayPal to process transactions:
There’s no 1.5% cashback from your PayPal debit card.
Selling and store fees are taken out of your payments.
You pay for shipping; you’ll need funds on hand to cover shipment costs before you get paid from eBay instead of waiting for payment directly from the buyer; if you opt to wait for payment from eBay, you may miss expected shipping timelines; if you post longer shipping times to accommodate for eBay payments, you may potentially lose sales to speedier shippers.
Instead of a single per transaction fee, eBay charges a per item fee, even if multiple items are on the same order.
Returns are automatically withdrawn from the payment balance; if you have no payments pending, and returns are applied, you won’t get paid until you make sales to cover the returns.
If you have existing loans from PayPal Working Capital, there are repayment options through eBay managed payments; however, your sales activity is no longer visible to PayPal, which means that even when PayPal is included as a checkout option, PayPal does not deduct automatic loan repayments from your eBay sales.
There are also listing restrictions that may further affect your ability to sell through eBay and potentially hinder cash flow. Sellers currently enrolled in managed payments are prohibited from listing:
Items containing nudity
Bullion, coins, and paper money if you are not a Business seller
Gift cards and coupons
Lodging, timeshares, vacation packages, car rentals
Tickets for travel, events, or experiences
Note that eBay managed payments are evolving as the platform rolls out. It is likely that some of these items may eventually be allowed. There may also be changes to the payment terms and conditions.
What Are Your Options?
Again, you either have to play by eBay’s rules or not play on eBay. For most sellers, that’s not an option. Like it or not, eBay is a well-established, well-known ecommerce platform, maybe only second to Amazon in terms of brand recognition. There are something in the neighborhood of 180 million active buyers on eBay. If you’ve been successful on eBay, whatever hit you might potentially take to your cash flow with managed payments is probably more than worth it.
You can, however, diversify. Set up your own ecommerce website and take advantage of PayPal again. You can also consider selling on other ecommerce platforms. The one drawback, besides time and effort, is that you’ll need tools to manage inventory and ordering across multiple channels. Failure to effectively integrate your selling processes among all your channels will lead to problems, such as canceling orders due to insufficient inventory and/or incorrect SKU methodology.
If you expect selling under eBay managed payments is going to negatively affect your cash flow, you can also look to bank loans and higher credit card spending ceilings. The obvious drawback is interest payments that further eat into your profitability.
There’s a better way that avoids high-interest rates and/or high monthly payback amounts. AccrueMe funding partners with your business, investing money with zero monthly payments without any ownership stakes. In return, AccrueMe asks for a percentage of your profits, but only if you have profits. It’s funding without liabilities or debts.
While AccrueMe is primarily focused on funding Amazon sellers, it could be just what you need not only to sustain your eBay business but potentially grow it.