EBay pushes PayPal on customers
Posted
Aug 20 2008, 02:05 PM
by
Kim Peterson
Rating:
EBay is getting lots of attention today for lowering "Buy it Now" insertion fees, but a different announcement caught my eye. Starting in October, customers can no longer pay with cash or a check. Instead, they have to use a credit card or eBay's own PayPal online service.
EBay says the move is designed to reduce fraud. But if a buyer wants to send a check (or cash or a money order), and a seller is OK with that, how can eBay stand in the way? EBay is pushing PayPal on its customers so it can charge PayPal transaction fees and boost its revenues.
I've written before about how PayPal is the shining star within eBay, with $582 million in revenue in the first quarter. PayPal's revenue grew by a third from the year before -- much faster than eBay's auction business.
EBay is going to milk the PayPal cash cow as much as possible. The company would roll out a PayPal-only policy in the blink of an eye if it could. It tried that in Australia this summer, in fact, but the ensuing outcry caused eBay to back down.
I think Australia was a test case to see what eBay could get away with. Now, PayPal or a credit card is permissible. But there will be no cash trading hands.
In its defense, eBay says that people who pay with a check or money order are 80% more likely to file an "item not received" claim with the company (eBay also says those buyers are 50% more likely to have negative feedback, which is irrelevant now that buyers can't receive negative feedback). EBay also says that sellers won't have to deal with fraudulent money orders anymore.
I've won an eBay auction in the past where the seller insisted on receiving a money order as payment. It was inconvenient for me, to be sure. But some buyers and sellers prefer to do business the old-fashioned way. EBay no longer tolerates that.
Here's an overview of eBay's new fee structure.
Here's what others are saying about today's news:
Silicon Alley Insider: "EBay sellers have a thousand gripes about the company, but what they all boil down to is, 'you're taking us to the cleaners.' Instead of trying to explain to pissed-off sellers that they really shouldn't be so mad, eBay should make them happy: By providing the simplest, most efficient, and most cost-effective selling solution in the galaxy."
BusinessWeek: "Auction sellers have argued that eBay is favoring fixed-price goods to their detriment, neglecting the business that made eBay the e-commerce giant it is today. EBay executives have countered, saying that eBay will always have auctions, though it has to give buyers the ability to shop the way they want. Increasingly, that means giving them the convenience of buying something for a set price."
EBay seller posting on an AuctionBytes forum: "Are they nuts? I will have to opt for a merchant account, as I refuse to use PayPal.... But, how about the casual small sellers??? Seems like another scam to force people to sign up to PayPal..."
