I own an eBay company so I know just how much this means for eBay. This is HUGE for them.
What’s happening: So up until now, each and every transaction made on eBay was processed through Paypal. Ebay took 10% per transaction and Paypal took an additional 2.9% + $0.30 per transaction. However, eBay has now introduced “managed payments” which will completely eliminate paypal from transactions and allow sellers to transfer directly to their bank account from eBay instead of paypal. Ebay will also collect fees for doing this so not only are they eliminating paypal, they are profiting by taking the fees that paypal would have took.
So here’s the basic change:
Before: eBay: 10%. Paypal: 2.9%+$0.30
Now: eBay: 11.5%+$0.25. Paypal: Nothing
What this means: eBay sellers are definitely going to benefit from not having to pay Paypal fees and eBay is going to benefit from taking an additional 1.5% + $0.25 that Paypal would have taken. It’s a win-win situation for eBay. eBay will definitely have increased revenue because of this as they are essentially taking over Paypal’s role in thier business. Paypal on the other hand, is definitely going to lose money as a decent percentage of their transactional revenue comes from eBay.
When will these changes occur? eBay is slowly transitioning to managed payments but states that by the end of 2020, most sellers will have managed payments. However, eBay is making this mandatory for sellers and won’t allow anyone to sell on their site unless they enroll in managed payments. The effects of this will become noticable within the upcoming quarters or at most early 2021. So eBay stock will rise substantially within the next 6-12 months due to increased revenue from managed payments.
TLDR: eBay is taking over Paypal’s role in their business and profiting by charging a similar, slightly lowered percentage that will generate a ton of revenue and help sellers.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.
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