Ready for eBay Managed Payments?
Well, ready or not, they are on their way! (And you may already have switched over).
Yep, eBay will no longer be using Paypal as their payment processor.
To be honest I was not excited about the announcement two years ago. But was even less excited when it was actually happening.
Who loves change?
Nope. Not me.
I’ve been using Paypal as my payment processor for eBay for almost 20 years now!
We are now a few weeks into the new Managed Payments system.
And you know what? It’s not all bad. Like anything, there are pros and cons and things that will be challenging.
There are definitely things about eBay Managed Payments that I’m not thrilled out, but there sure are some great benefits to it that I’m surprised about!
With that said, and as much as I hate to say it, I think the pros may outweigh the cons in the case of eBay Managed Payments.
So let’s jump into the good, the bad, and he ugly of Managed Payments.
EBay has assured its users that everyone will be switched over to this new system by the end of 2020, so there’s no time like the present to find out how eBay Managed Payments will affect you and your business. This includes the positives and the negatives!
As of August 15, we switched to the new system and so far after a total of five transactions with the new system, I’m surprised by its benefits. With our limited experience with managed payments, we are giving it a thumbs up!
Time will determine if we change our minds.
So let’s unpack the pros and cons of eBay Managed Payments.
Cons of EBay Managed Payments
No Immediate Payment Options
One of the great benefits using Paypal was the ability to access our funds immediately.
As an established seller, as soon as someone purchased an item from me on eBay, the money showed up in Paypal.
Not only did it show up, I could pull it out of Paypal as soon as it landed in our account.
This was great for our business, as most of the items that we sell are large, high dollar items that require freight shipping.
Freight shipping our items cost in the upwards of $100-$300 to ship. Using Paypal, we had immediate access to those payments right away. This allowed us to use the money to pay for our freight shipping costs and any shipping supplies needed to get our sold items to their new owners.
Now for the negatives. Unfortunately, and not without complaints, eBay Managed Payments has a 3-5 business day lag before our payments are deposited in our bank account.
We have our managed payments set up to pay out to our bank account daily. But the payments we receive are for sales we made 3-5 business days before we get the money in our bank account.
Not ideal and this new way of doing business causes two concerning new problems in our business.
Delays in Our Handling Time:
Not having access to our funds immediately slows our shipping time. Plain and simple!
We will not be shipping our items out to anyone without having the money in our account. Often our eBay sales are large, expensive items anywhere from $1,000 to $15,000.
You can bet we are not excited about or even willing to ship something that expensive out without knowing we have the money transferred to our account.
We’ve had to make sure all our freight listings are set for 3-5 days handling time in order to make sure the money has been transferred to our account.
It would be disastrous if we shipped a $15K item out only to find out the buyer cancelled the transaction and the money was not transferred to our account!
Now we need to note that most of our large profit items are set to 3-5 days handling time already.
Most people expecting a freight shipment do not expect it the next day and know that it will take some time to put on a pallet to ship.
For our smaller items we still offer a 1-3 day handling time.
If you have any doubts about the money in your account you can always call eBay, (Or more recently have them call you), to verify the funds are there.
Paying Up Front for Freight Charges:
As most of you know, with our business model selling high-dollar, large items that need to be freight shipped, not getting our money immediately poses a problem.
Although freight shipping isn’t as complicated as people think it is, there is a cost to getting the supplies together to build the pallet and the shipping can be anywhere from $100-$500.
This amount is included in the transaction for the sold item. So when we are delayed receiving it, we are stuck coming up with the funds before those funds are made available in our account.
When using Paypal, we had access to our funds immediately. When someone purchased our items, we could access the money right there. We have a Paypal credit card that we could access to purchase the pallet supplies and also pay for the freight shipping costs before shipping to the buyer.
Unfortunately, because of the 3-5 business day delay in receiving funds, we are stuck paying out of pocket.
Because freight shipping is a little more complicated than shipping Fedex or UPS, we get started on our pallets as soon as the sale happens. That way we can get the item out in a timely manner. This makes our customers super happy!
We don’t want to stop this, so as soon as the sale happens, we are immediately preparing the pallet for shipment. In doing this, we like to purchase our freight shipping labels as soon as we can to upload the tracking number to the customer.
Due to the 3-5 business days delay in getting funds, we’ve had to make some changes in our business budget to have the funds available to pay for these things BEFORE we have the sale money available to us.
It’s not ideal and the delay in receiving funds puts a damper on our bank account, especially when we are shipping multiple freight items. This is a new change for us and something that we have to adjust to in our business and plan for.
Complicated Accounting
Paypal was so simple and easy to use. Or maybe I was just used to using it and comfortable with it over 24 years. So many good benefits with Paypal:
- Immediate access to funds
- Paypal Credit Card for Easy Access
- All Payments and Fees In One Easy Report
We loved the idea that after you get established, when you got paid, you had full access to the funds without delay. Paypal became our business account with all of our profits in one place.
We would use our Paypal credit card and use the funds available through Paypal for shipping supplies, freight labels, and anything else that was business related.
At the end of the year, we had one report to print with all of our purchases through Paypal, fees, payments we received, and much more. It was uniformed and easy to get the information.
We loved it and it made our life easy. (Except for that one time they tried to hold $25K of our money...)
Things will be a bit more complicated now with eBay Managed Payments. Instead of using Paypal’s credit card and having access to the funds, we will have to open up a separate business account.
Nobody wants to sort through the craziness of sorting through eBay deposits in their regular bank account.
So we decided to open a separate online checking account with CIT Bank.
They have no fees (unless international) and you can get a debit card for your account (and no ATM fees). They have both website and mobile banking functions
We just recently started using it, but so far so good! (We did try 4 others before we settled on CIT Bank!)
The biggest drawback is you have to open your account with $100. Not the end of the world, but a little inconvenient.
Check out CIT Bank to use for your eBay account
Now I don’t want you to feel discouraged by the negatives about Managed Payments. It’s not meant to be!
Let’s switch gears and get to the good part. Let’s talk about eBay Managed Payment Pros – And there are a few good ones!
Pros of eBay Managed Payments
Less Fees
Okay, now this is a big one for us.
Who doesn’t love saving money, right?
I cringe sometimes when I see how much my eBay fees are at the end of the month. It’s great when we make amazing money, but it sure isn’t fun paying eBay when the fees are due.
There’s good news with eBay Managed Payments – It will cost you less!
Before managed payments, we would have two fees to pay: Ebay Fees and Paypal Fees. Combined it would be about 13%. We would pay eBay 10% for their part and almost 3% to Paypal for funding the transaction. When we bought a store subscription, it was around 12% total for the two as we paid 9.1% to eBay instead of 10%.
All in all, we expected to pay 9.1% to eBay with a fee cap of $350.
For instance, if we sold something for $4,000, we would only owe eBay $350. After the transaction was complete with Paypal, they would take their 3% of the $4,000 total.
We were pleasantly surprised after completing our first four transactions with eBay Managed Payments – We paid less – much less!
Because we sell such expensive items, the change in fees is a big game changer for us! We sold a large commercial stove for $2,800 recently.
Using the old system, we would have paid $334 between eBay and Paypal feels. With the new eBay Managed Payments system, we paid $294! That’s a savings of $40.
How the new system works is with a store subscription, we pay 11.5% (combined final value fees and payment fees) on the first $2,500 and 2.35% for the amount over $2,500.
Anything over $2,500, we pay 2.35% on the difference. This saves us quite a bit of money.
If you do not have a store, it’s ok. You are still paying less! You will pay 12.35% instead of 13%. It’s still nice to pay less.
Some of you may have heard of our bus wash. We have it listed for $15K. This can equal a lot of fees! If we were still on our old system, we’d pay $785 in combined fees. But we will save $217 with the eBay Managed Payments system paying only $568.
To put it lightly, we are thrilled by the savings and you should be too!
Saving money makes us happy and this is one of the best perks about this new system that we are really looking forward to!
More money in our pocket is always the business end-goal!
No Outrageous eBay Fees Billed Monthly:
As I said before, since we sell such large items, you can just imagine how much we paid in fees at the end of the month. Sometimes our eBay invoice would be over $1,000!
So at the end of each month selling on eBay, I would sometimes have a big surprise and I would often forget all about the eBay invoice in the excitement of my big sales!
But eBay didn’t forget and at the end of the month, they would remove the fees from my Paypal account and it was a big hit.
One of the changes with Managed Payments is eBay now removes the final value fee at the time of the transaction.
This is very helpful for us and we really love this new change. We like to know our bottom line and having the money taken immediately helps us with that.
No more surprise $1,000 final value fees from eBay. It’s all taken care of right at the time of transaction and that’s the way I like it.
Now don’t get too excited that you will never see another invoice from eBay. Subscription fees, ad and promotional fees, and fedex shipping fees will still be invoiced to you at the end of the month. But you will no longer be seeing large invoices that include final value fees!
I think that’s a big plus and improvement to the whole selling experience using eBay Managed Payments.
More Options For Buyers To Pay
With eBay Managed Payments buyers have more options to pay. As a seller this is great because it increases your chance for the sale.
Buyers now have the option to use credit, debit, and gift cards; Apple Pay; Google Pay; PayPal and PayPal Credit). No separate PayPal account required – for buyers or sellers.
Convenience for Reporting
We talked about accounting being more difficult as a con to managed payments, but really that’s only because we have to move from Paypal to a separate bank account.
Once that’s set up, reporting should actually be easier because of having all the information in one spot in your seller hub.
Instead of having to break down eBay fees and Paypal fees in separate locations, it’s all in one spot. (You will now get your 1099’s from here too)
Streamlined Returns:
Along with Managed Payments, eBay announced they are working to streamline returns.
EBay is trying to make the process easier for the buyer and give them access to the shipping label immediately. We are still waiting to see how this plays out for sellers.
We do not accept returns as part of our business model and they haven’t taken that option away.
You also still have the option to charge a restocking fee and charge the buyer with return shipping.
Nobody wants returns, but we all get them. If we can make the experience better for everyone, it will go smoothly. If the return process is less frustrating, we will protect our feedback and have a better overall experience and that’s good for business.
Refunds & Claims Held From Pending Payments
With the new system having a delay in payments, you will have pending payments after each sale. If you have a refund or a claim made the money will be taken from your pending payments.
If there is no money in your pending payments then you will be charged by the payment method you have on file with eBay in 14 days.
This is not really a pro or a con, just a way of doing business. And it’s worth to note because I was super curios how they were going to handle processing refunds and claims since it wasn’t through Paypal anymore.
Our Take On Managed Payments
In conclusion, there are always pros and cons to everything. Educating yourself on the pros and cons that will directly affect your reselling business is crucial.
Check out the positives and negative, and anticipate changes you have to make in your business to help you make the negative aspects of the change less of an issue.
All in all, we expect to have some growing pains with the eBay Managed Payments and we will need to make some changes to our business.
But we are hopeful and we feel the positives of the change definitely outweigh the negatives with eBay Managed Payments and we will come out better on the other side!
I mean, who doesn’t love paying less fees!
We want to hear from you
Comment below and let us know your questions about eBay managed payments or your experience so far.
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FURTHER RESOURCES
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Well how about now? Hope you still are with eBay . Power seller, well used to be. Seems eBay is all about the buyer. August 2021, 12.5% is given to EBay including shipping!! Time to rewrite this article? Or just blame it on the pandemic?
I am still with eBay. We actually average 9-11% fees. They have always added fees on shipping because years ago people tried to cheat the system and sell their item for $1 and charge all the money on shipping so they could not pay fees. I have yet to find a platform that is less in fees. Ok, well Facebook Marketplace is but you cant get customer service on the phone so until that changes I won’t ship through them.
Are you paid or subsidized by Ebay for this website or your comments?
nope. I wish we were sponsored by them.
@Robert Stevenson – I have never given Paypal my Social Security number. They have my name, banking info and email address. They have no other info I don’t want them to have. I have been using Ebay and Paypal since the 90s. There is a very specific reason that people use Paypal, to NOT give your personal account info out to other sites. Ebay is not a banking or money handling entity. I don’t trust that they have sufficient security measures in place to protect my personal info, and so I cancelled the selling part of my user, and am only a buyer now.
Ebay likes to just take your money when they side with the buyers, which they almost always do. So the same money they deposit into your bank account, they will take back out when they see fit. And soon it will transition to them taking fees and fines from your banking account too.
Remember how people used to sign up for automatic payments from their checking from different places like gyms and other places, and how it was a nightmare to get them to stop taking those payments from your account? You can look at Ebay as that problem times 10 in headache levels. Most people will end up having to cancel their accounts to get Ebay to stop.
The amount you will pay Ebay in fees and such is in fact more that what you used to pay Ebay and Paypal combined before. Add up what you pay in total fees for auctions from listing to receiving money now, and compare that to what you paid for auctions of a similar value before Paypal was removed from the equation. For sure you are paying at least slightly more now than you used to, unless you have some special designation on Ebay.
And as others have commented, with the way you are defending Ebay, it definitely sounds like you are in partnership with them over this travesty that totally goes against the sellers, from almost every aspect.
This post was written before we had experience with managed payment, and while we do plan on updating it, our views don’t change a ton. We have been watching our fees and they are not any higher than before. We do sell higher dollar items though, so there is more of a cap on those than the smaller items. As far as a the bank account – we did open a separate bank account specifically for ebay – so they will only have access to that and not our bank account. (We keep business separate anyway). At this point we do prefer paypal to managed payments (mostly for the delay in payment and paypal had it figured out if there was a cc dispute). But that said, Paypal was/is far from perfect too. 4 years ago they held over $20K of my money from an ebay transaction. They said they had the rights to hold onto it for SIX MONTHS! So after a few weeks of phone calls I finally found some advice to write our local congressman. Within 72 hrs of submitting the letter, Paypal released the funds. So they have their own shady tactics as well. Do we love managed payments – no. Will it keep me from selling on ebay and making $$ – nope.
well this article is bullshit because ive been usign ebay payments and i have not gotten my money in almost a month along with 1,000 of other sellers…there will be a huge law suit coming from tons of people soon for them taking or money and losing it in between transferring.
I’m sorry that happened! We have not had an issue like that yet. We do want to update this post soon because there are a few things we aren’t happy about either, but still wont stop us from using eBay. Have you ever received any payment from ebay? Or none have gone through since you signed up?
I’d like to know if it really is considered safe to add your social, birth date and bank account to your ebay account. Even with a separate bank account, it would seem with access to the rest of your information that your main accounts could be hacked. I don’t sell very much, mainly Harley collectibles, so I don’t think the changes will affect me that much, except for possibility of information getting into the wrong hands. Please comment. Thanks, Marge
I totally get people don’t want to give that info – but its the same information we had to give to PayPal. The IRS requires eBay to collect it since they are managing the payments. I would definitely have a separate bank account on file for it though.
It’s “fewer fees.” It’s not less fees. Fewer is a word. A good word. Try it.
thanks. This is why I teach flipping. I failed English in High School 😉
This is obviously a Managed Payments ad by EBAY. Make no mistake, EBAY is finished now without PAYPAL> Game over. Closed my account.
😆 We are not paid by eBay in any way except when we sell an item. Everyone hated PayPal before and now you don’t have to deal with them. I’m sorry you chose to close your account. Best of luck! There are some other good apps out there! (But they all have roughly the same amount of fees)
Hello, been on EBAY since 2004 and CLOSED my account a week ago. EBAY was great with PAYPAL and it now SUCKS so HARD. Managed payments, yuck! Paypal was great. EBAY you suck and I”m done!
sorry you closed your account. Everyone hated Paypal too. Now, I don’t love managed payments, but I think they will keep working on it, and right now I still can’t beat eBay’s reach anywhere else (for now)
Do you know if you can still have the money deposited to your PayPal account?? I don’t want to open a new bank account. I input my paypal routing number and paypal account number into the direct deposit field and it is not accepting it…assuming you can’t use paypal at all anymore…but hoping you can…
We never tried to connect our PayPal account as the bank of choice, but we did just open a CIT account a few weeks ago and it’s been good! https://www.kqzyfj.com/click-8248130-13004372
You can not call Ebay anymore.
you actually can! Here is one way – https://youtu.be/WPL28Opy1yM
And this number usually works too.. .1-877-322-9227
Do any of you KNOW what receiving a Federal Form 1099 (misc income) form means!!!? Per the “stove” picture listed above in article: you receive a Form 1099 showing that you received $2,800 in miscellaneous income (and the IRS get a copy, too! You have to claim that “income” on your tax return for that year, but you can deduct what you paid for that item if you have proof. After all, you did “make” $2,600 by selling the item. Think about it.
We are required to report this income whether we receive a 1099 or not. We always pay our taxes. When you are self employed there are a lot more expenses you can write off too.
Started with eBay 1 year after it got going ..its been an overall wonderful experience though I’ve had my share of horrible customers.. and some mind blowing surprises .. I’ve gotten fast and efficient at listing.. its the only game in town like it or not .. etsy is okay..Bonanza is terrible Discogs is great for records… the managed payments has more cons then pros. ..which is what brought me here.. fronting a little money is okay with me but I can’t or don’t want to tie up $150 or so. Trying to figure out a work around on that problem.
That is my least favorite part too. But If you get consistent sales going then you are getting deposits almost daily so that helps!
This article is misleading and sounds like a PR article for Ebay. Ebay has jacked up their fees and is CHARGING FEES ON TAXES. Not only does this make accounting an absolute nightmare but if you do the match you are paying more with the new Managed Payments than you were with Paypal fees. It is a win-win for Ebay as they are taking all of the money now and cutting out their middle man. Unfortunately for most sellers like myself we have no where else to go – AND EBAY KNOWS IT. They don’t care. If there was a different service with just as large an audience that doesn’t pull such schemes, I would move to it in a heartbeat.
I totally get what you are saying – and when we wrote this we didn’t know about the sales tax % fee. So we are digging more into that because they shouldn’t be allowed to charge a fee on sales tax! BUT. who wants to learn 50 different state sales tax laws and remit taxes for every state? What a headache that would be for sellers!! & we are def not eBay PR. We aren’t paid by them at all.. (maybe we should be ha!) But we have yet to find a better platform to sell on.
Just listed an item…occasional seller. Then I see the message about a new payment method. They want my Soc. Sec. number and bank account information to store on their site? ARE YOU FREAKING KIDDING ME!!!!!?? NEVER!!!!!! Ebay is delusional! Lets see…they hacked Equifax, the Pentagon… TWICE! I am suppose to trust Ebay’s security? Well…took that item down, and will no longer use eBay.
You had to give your social to PayPal. Whoever is in charge of the transactions is required to report it to the IRS. eBay isn’t making up the rules, the IRS is.
Don’t believe a thing Ebay is telling anyone about Mananged Payments. Ebay has been pressured by the federal and state governments after the Supreme Court decision to collect sales tax on every item bought and sold on ebay. The government wants a detailed record of every item purchased and sold on ebay for their records. Don’t kid yourself that ebay will only send a 1099 if $20,000 of sales are recorded or 200 items are sold. Once ebay has your social security and bank account they are obliged to forward this information to the IRS. The IRS can then penalize an individual for not reporting every sale made on ebay. This is going to force casual tag sale sellers to keep records of every item purchased so it can be deducted against every item sold. It going to force the casual seller to form an LLC and keep accurate records along with sales receipts of flea market purchases. As a result I’m out. There has to be some techie that can start a business to compete against ebay and one up them. Ebay right now Stinks!!!
Hi Michael! You are supposed to keep records of every sale anyway – even if you don’t hit $20K in sales.
EBay is a joke. Try selling something and having your buyer return an item that wasn’t even what you sent them. You have no rights as a seller and have to suck up the loss.
Sorry you had a bad experience. Do you have seller feedback? We recommend taking pictures and videos of the item before it ships out and also very detailed of the packaging. If the item is not returned to you in the same way it was shipped out you can open a claim. It may take a few phone calls to ebay but you can make it happen.
What a joke, now everyone will have to report taxes on little sales here and there. Not to mention the buyer has to wait for funds to settle before the seller will ship. Moving on from eScam
No matter what income you make you are supposed to report it as income on your taxes. That doesn’t change anything. You can write off more however if you claim a home business. (We are not CPA’s so contact a tax professional for your taxes.Just sharing our experience.)
I have been a seller since 2003. I am closing my Ebay account. I am not comfortable giving another company my social security number, date of birth, banking information. Security can be breached and I don’t make enough money to deal with the changes. Yes it helps the big sellers, but I am not an Ebay store. Today there are just so many more options for selling items that I can live without Ebay. I buy on Ebay as well, but I am over that as well.
Sorry that it doesn’t work out for you. What platforms are you moving to?
Your whole article is wrong. Ebay actually charges more in fees for almost all sellers. You now have a .30 fee for every item sold on top of their old fees and on top of that they have raised their standard fees as well making most of them more expensive than it was through PayPal.
We wrote this article right in the beginning of managed payments. What we didnt take into account was they are charging fees for sales tax which isnt cool and we didn’t read that in any of the literature. Working to write our congressman about that issue now.
Don’t like and won’t give out my birth date, SS# and bank account to ebay, even if they say its secure.
that’s a valid point. You could always open up a separate bank account specifically for eBay.
Who is this Robert Stephenson guy? Apparently he works for eBay!
hmm, hardly…
I’m closing my store and only selling on Etsy or Bonanza. This managed payments is a joke! I think Ebay will go under over this. they are too greedy!
best of luck! We’ve never used Bonanza before.
Absolutely disgusted with the new managed payment system! 11.5% is too friggen high of a price to pay on every transaction. I will be closing my ebay store because of it.
it was an average of 12.9% with eBay and Paypal together
As a buyer, it is hugely frustrating to have my basket split between MP sellers and non-MP sellers. I often can’t be bothered with an MP purchase because it causes me to type passwords in 5 seconds after I last did. Th MP extra margin on the sale you didn’t get is worth much.
Soon everyone will be MP so you wont have a split basket. I’m sure it’s frustrating to retype your password. I would think that is something they would fix and it would be more streamlined once they get all the bigs worked out.
I switched and now I cannot sell two silver bullion bars at $1000 each… they are a restricted item!!!!! Had I known I would have held off on changing to managed and sold the items before Christmas. If I had designer clothes I could sell them for high prices, but not silver. Both a risk of fake products.
Sorry to hear that! Did you call eBay and talk to a supervisor to see if you can get it approved on your account? It may just be something they can change with a phone call.
Problem also is they dont have many banks that people use around the country. My bank wasnt on there either. So you cant migrate over to the MP with your bank or get a new bank. Im sure that was a coincidence ?
I’m sure as they get more experience with MP that they will add more bank options to it. They are forcing people to migrate over eventually.
If you think you’ll be saving on fees for long, think again. eBay has a history of rolling out ideas at a discounted price and then hiking up the prices. It won’t be long before you’ll be paying 15%.
As far as the ‘outrageous bill’, I was charging my $1,000 bill to a credit card that kicked back 2% so now I’ll be losing that $20 per month. They just picked my pocket for an extra $240 per year.
Maybe by the time they come up with 15% there will be a better platform to sell on. 🙂 Sorry about the $240/year.
The changes in fees are only positive if you are selling very expensive items. For everyone not selling items for thousands at a time their fees are going up significantly, multiple percent higher.
My average sale is about $10, and for me mp would be a huge fee increase. Plus I would need to pay for a bank account specifically for ebay, would have to wait for my money, would have significantly less seller protection, and significantly less control over my account and finances.
Managed Payments is good for an extremely small percentage of sellers, and horrible for the rest.
I understand there is a bigger savings for selling higher cost items. But you still are paying 11.5% in fees instead of 12%. No, not a huge savings, but it’s not more than you are paying now. Why do you see a huge fee increase?
Hi Rob, thanks for the info on managed payments. What I notice—and don’t appreciate—is that eBay is now holding my money, and earning interest on it while immediately taking their fees with no waiting time. Are the interest earnings from each seller small? Perhaps. But combined?
That new practice alone damages the trust I feel toward the company. And I think your description of the new process would have been more complete by including that point.
I get your frustration. I want my money right away too! But Paypal has had their fair of shady things too. And I know they used our money to invest so they can make more. I don’t think any platform/bank is perfect. We will see how managed payments goes.