Free of the restraints of a legal agreement with PayPal Holdings Inc., eBay Inc. said early Monday it will now start on a global expansion of its 2-year-old managed-payments program. The program has already delivered $4.7 billion in total payment volume in the United States and Germany, the company said, adding that some 42,000 merchants had been enrolled by June 30.
The managed-payments regime, in which eBay has replaced payments-processing from PayPal with a gateway arrangement with Dutch processor Adyen NV, now serves 255,000 sellers in total and has cut their total transaction costs by $17 million so far, eBay said. “Most sellers can expect to see savings in managed payments,” the San Jose, Calif.-based company said in its Monday news release. The program is active in Germany as well as in the U.S. market, with announced plans to expand to the United Kingdom, Canada, and Australia. These markets will now come online “over the coming weeks,” the company said.
The current timetable calls for switching a “majority” of eBay’s sellers to the new program by the end of next year, with all merchants on board some time in 2022. In that year, managed payments will generate $2 billion in revenue and $500 million in operating income for eBay, the company projects.
But recent reports have indicated uncertainty among at least some sellers about how the new program will affect their costs and what will follow if they fail to convert to managed payments this month. For its part, eBay promises managed payments will deliver a faster and easier checkout for sellers and their customers. “We have already seen incredible momentum with managed payments,” Jamie Iannone, president and chief executive, said in a statement.
Up to now, eBay’s moves into payments processing have been governed by a five-year operating agreement the company signed with PayPal in July 2015. EBay acquired PayPal in 2002 and spun it off in an initial public offering in 2015. In September 2018, eBay began relatively modest operations for the new managed-payments platform, which enables transactions on a wide array of media, including the Apple Pay and Google Pay wallets as well as credit, debit, and prepaid cards, in addition to PayPal.
Anticipating the loss of eBay’s business, PayPal has plunged into a number of new ventures in recent years, including a tie-in with Mercado Libre, an Argentina-based online marketplace. When PayPal signed the agreement early in 2019, Mercado Libre had 248 million registered users in 19 countries, compared to eBay’s 182 million. PayPal also invested $750 million in the marketplace.