New eBay Payments Beta Comes with Significant Restrictions

eBay has already sent out emails and asked sellers to join its beta program for eBay Payments, which over the next two years will slowly roll out in the US (and one other unnamed country) and eventually replace PayPal as the main payment processor for eBay sales.

Reports from eBay’s eBay Open 2018 seller conference appear to throw some major hurdles on sellers that were ready to give this payment system a try.

No PayPal Payments During Beta

Sellers that opt-in to the eBay Payments beta will not be able to accept PayPal as a payment method.

This may be the most significant “killer problem” for many sellers as buyers are so used to using PayPal than any other form of payment system that requires them to use a credit card could end up costing sellers in sales.

eCommerce is about convenience and there is no doubt that PayPal is the most integrated and convenient payment method on eBay.

While eBay said this would be temporary, without knowing how long this “temporary” situation would last, it seems a huge risk for sellers to take going into the holiday season.

No Opt-Out Option

The second biggest killer problem for sellers may be that sellers that decide to give eBay Payments a try cannot switch back to the “old” system.

If sales are starting to suffer for sellers because they cannot accept PayPal or there are glitches and too many other problems with the new eBay Payments system, sellers are stuck and cannot revert back to the old system that integrates with PayPal.

While it is understandable that eBay wants to avoid flipping back and forth, it seems very shortsighted that sellers that decide to enter the beta would be placed into a situation that gives them no way out.

The whole idea of a beta is to test and if the testing is going wrong sellers should have the option to be able to go back at least once.

No Third Party Apps Integration

Many third-party apps such as financial apps and software may integrate via an API to collect sales and order data.

This kind of integration can save sellers hours of time trying to reconcile their businesses. But at the start of the beta, and likely most of the way through of the two-year testing phase, sellers will not be able to automatically import financial data from eBay Payments into their accounting software.

Depending on a seller’s volume and operational back-office integration, this could be a significant time cost being absorbed by sellers.

Access to Funds is Limited to ACH Transfer Times

In the eBay Payment system, all funds are settled at the end of the day and then transferred to the seller’s bank account. The transfer time can vary from 2 to 4 business days depending on the seller’s bank policies.

For larger sellers that may be okay as they are likely running multiple sales channels and all sales are funneled to a common bank account. These sellers already are accustomed to credit card and transfer time floats, so having one more payment account like that will not really impact them.

But for small sellers that primarily use their PayPal account as their “business banking account,” this will be a problem.

The money from eBay transactions has to go to a bank account, so it cannot just show up in PayPal.

Because smaller sellers may never have opened a business checking account, commingling personal and company (eBay sales) funds in a personal bank account can get tricky and even confusing to track.

eBay sellers that decide to give eBay Payments a try really should use a separate businesses checking account. And if those sellers use PayPal to purchase products, they may have to transfer monies from their bank account to PayPal.

Cash Flow Implications

This back and forth between accounts and the ACH transfer time may add some cash flow implications for smaller sellers.

This is especially true if using PayPal’s shipping labels as they are paid for from PayPal funds that normally would be available immediately after a buyer makes a purchase under the current PayPal centric eBay payments system.

And some sellers use PayPal funds to pay for shipping supplies on eBay or purchase inventory, so again, this may become an issue for sellers that decide to opt-in to the eBay Payments beta.

READ MORE: eBay Announces Apple Pay Will Join eBay Payments at Launch

To Opt-In or Not?

On the surface, there should be a great value to opt-in to the eBay Payment program early as that would allow sellers to become comfortable with new policies on disputes and gauge buyer behavior on adoption away from PayPal.

eBay is even offering a slightly better deal than PayPal on transaction fees and tries to lure sellers into a better resolution experience. Although, some question with eBay’s track record on its “seller-first” resolution process if that is a “selling point.”

Ideally, it would be best if sellers could open a second independent account which would allow them to try the new eBay Payments on select items.

But it doesn’t appear eBay is offering that option right now as they are trying to find a substantial number of sellers willing to give the beta a try.

While eBay says some of the key issues mentioned will be resolved during the beta, it seems others, such as the cash flow implications, will stay part of the new deal.

It may be true that over time eBay’s Payment system will resemble a wallet allowing for payments of shipping charges or even buying products on the marketplace, but right not it appears that will not be part of the initial beta rollout.

For sellers whose main revenue is from eBay sales, it would seem staying away from eBay Payment right now may be the most prudent decision.

There are cash flow implications that can be overcome with the use of a credit card. And shipping can be moved from PayPal to platforms such as ShippingEasy, ShipStation or managed on listing platforms such as InkFrog or SixBitSoftware.

For every before mentioned restriction or problem, there is a workaround. But for sellers that heavily rely on eBay sales from customers that are used to using PayPal, the potential loss of sales may be the biggest reason to wait.

And there is no workaround for that unless eBay opens up to allow eBay Payments beta users to also accept PayPal.

Botched Beta?

Long term, the need by eBay to run its own payment system is understandable. But these beta restrictions seem to lack any understanding by the company about how sellers feel about this transition in the first place.

This should be made easy and with full transparency, instead, it seems to be riddled with uncertainty and lack of disclosure unless one reads the fine print.

The beta in its current form is unlikely going to find many takers, which brings up the question, how well will this system be stress tested during the “trial phase?”

And if there is a significant failure of some kind that impacts beta participant sales, will the company relent and allow going back to the old system?

If so what impact will such a failure have on the credibility problem the company already faces with the new payments program?

READ MORE: eBay Invites Sellers to eBay Payments “Beta” with Fee Discount Enticement

If you liked this article and would like to engage with other small business entrepreneurs selling on marketplaces, join our . You can also find us on , , , and or sign up for our newsletter below.