EBAY MANAGED PAYMENTS AKA “THE GREAT EBAY CASH FLOW GRAB”
If you have time, please read all the way through this.
I have been selling on eBay as a business seller for 20 years in Australia. In those early days, Ebay offered an excellent platform for small business operators to develop a profile selling on the net. In a few years, my initial hobby business became a full time focus and developed into “hybrid “ business with a bricks and mortar operation from our warehouse location. That operation continues today.
eBay grew in Australia but struggled in New Zealand where it eventually had to buy “TradeMe.co.nz” which had beaten them into that market. As eBay grew, policies flowed like water from the parent in USA – many of which were not a good fit for small traders in the Australian business community but compliance was required, with, in some cases, significant time and process change costs associated with compliance requirements.
Initially, as our business grew, we had our own eBay Account Manager, who kept contact with us regularly to see how they could help a small business on line. We felt like we had a partnership growing. In 2005, we were the customer, and the customer’s needs were important to eBay. The relationship with eBay and their attitude to small business sellers is very different in 2020 / 21 . eBay should pay attention to the fact that we, the sellers are THEIR customers. The buyers of our products are OUR customers, NOT eBay’s.
The essence of a sale transaction is an offer of a product or service by the seller, in return for which there is consideration (usually payment) from the buyer. The seller may incur transaction costs of marketing their offering but the providers of those services ARE NOT part of the transaction relationship between seller and customer.
At no stage do I want eBay to “manage” my relationship with my customer nor do I want them to “manage” my transaction with my customer.
TRENDS OF INCREASING EBAY COSTS AND COMPLIANCE REQUIREMENTS
Over the last 5-7 years eBay has steadily looked for ways to take a bigger share of the sales transaction revenues with higher fees for Store promotions, promoted listings and promoting the use of Postal and Courier costs that are billed through the eBay account system.
Although sellers can alternatively realise significant discounts off line with direct deals with Courier services and AusPost volume discounts, the eBay expectation is that the seller absorb all increased selling costs through their system without affecting business viability.
I’m not sure if eBay policy makers have ever actually operated an on line business themselves.
SO WHAT IS “MANAGED PAYMENTS” REALLY ABOUT?
Until the managed payments policy development, eBay revenues were “lumpy” around a mid -month auto payment of Invoices issued for final value fees and other subscription costs to the end of the previous month . Managed Payments by contrast produce smooth revenue stream for eBay with fees received on a daily basis.
Importantly, if we assume that eBay fees trended at an average of 10% of sales value for sellers, then seller revenues of $10,000 in the month would put $1,000 in the eBay bank around the middle of the month.
NOW, with “Managed Payments” , the eBay bank account receives all $10,000 of your sales receipts in their account. Sure, they pay out the $9,000 after holding the funds for an average of say, 2 business (banking) days.
Wouldn’t your Bank look favourably on your business if your cash flows suddenly increased by 10X over what they were last year??
eBay benefits from overnight use of YOUR funds in the short term money market and IN EFFECT, eBay HAS CONTROL OVER YOUR BUSINESS CASH FLOWS ! WHAT BENEFIT DO YOU RECEIVE FOR THAT??
ADDITIONAL COSTS CARRIED BY SELLERS
During those 2 business days while you wait for the funds that you would have had immediately through PayPal, Credit card payments or EFT, YOU the seller, incur additional Banking charges including interest on those funds and costs associated with inability to pay suppliers and opportunity costs when spot purchase deals pass you by.
Payments from my customers through PayPal are in my account immediately and are available to me immediately to disperse to other payment channels, pay suppliers, rent, or meet other costs. UNDER MP, I have to wait for at least two business days (eBay email advice) for eBay to process the transaction and confirm that they have no transaction issues that THEY think justify holding funds rather than automatically transferring those funds to me.
eBay BUSINESS INTERESTS COME FIRST. You, the seller, work for them! (Should be the other way round!)
eBay also benefits in terms of their corporate share prices when cash flows grow that much. WE THE SELLERS are funding that growth with NO BENEFICIAL RETURN TO OUR BUSINESSES.
Remember that eBay owns PayPal and also owns GUMTREE (in Australia). With Managed Payments, they have already admitted through comments from their staff who call to chase up people like me who have resisted signing up to their new Cash Flow Grab (CFG) that eBay has intentions of entering the financial services sector and this is clearly a significant step.
Like other sellers, I’ve received the email warning that if I don’t sign up by mid June 21, then my listings will be terminated and no new listings will be possible.
SO I FILLED IN THE FORMS to protect my business presence on line
My business is a Family Trust. Never in 20 years has a Bank or other commercial service provider required intrusive details in order to provide financial services, mortgages, car loans, equipment leases etc. BUT eBAY claims it needs to know the finest grain personal detail of our business structure “in order to comply with relevant law” although they won’t specify which legislation or regulations are relevant, nor do they specify whether the requirements are due to Australian legislation or USA legislation where the policy originated, or Swiss legislation (where our monthly eBay fee payments end up).
AFTER SOME MONTHS TO CONSIDER WHAT eBAY IS DEMANDING , WE WILL BE MOVING OUR ON LINE BUSINESS TO ANOTHER PLATFORM BY THE THIRD QUARTER OF THIS YEAR.
