eBay Policy Update: Nearly “PayPal Only” (More Details)

As an update to eBay’s frequent and ongoing policy changes to a “PayPal Only” payment system, details regarding previously announced changes that further integrate PayPal into parent company eBay have been further clarified. Such changes include the elimination of checks and money orders under most circumstances.

While this was reported back in August (see eBay Policy Update: Nearly “PayPal Only”), more specific details are now outlined on the eBay website (thanks to Jason at MoviePropKing.com for the link). These details as archived pertain to the U.S. site only:

Checks and money orders no longer allowed

What’s changing with payments on eBay?
Beginning in late October 2008, checks and money orders will no longer be allowed as payment methods on eBay. All items appearing on eBay.com must be paid for using either:

PayPal (funded by PayPal account balance, credit card, debit card, bank account, PayPal Pay Later, PayPal Buyer Credit or eBay gift certificate)

Credit or debit card payment to a seller (through a seller’s Internet merchant account)

ProPay

Payment upon pickup

In January 2009, all of the approved electronic payment methods will be integrated into eBay checkout. For example, if a seller offers credit or debit card as a payment option, buyers will be able to directly enter their credit card information securely in eBay checkout and their payment will be directly routed to the seller’s Internet merchant account.

We are also working with other electronic payment providers currently included in our Accepted Payments Policy to integrate their services into eBay checkout in 2009.

Learn more at the Payments Overview Page.

Are there any categories excluded from these payment requirements?
Vehicles (Motors), capital equipment (Business & Industrial), Mature Audiences and Real Estate will be excluded from the new payment requirements. Specifically, the following categories will be excluded:

Motors > Cars & Trucks

Motors > Motorcycles

Motors > Powersports

Motors > Boats

Motors > Other Vehicles & Trailers

Business & Industrial > Agriculture & Forestry > Tractors & Farm Machinery

Business & Industrial > Construction > Heavy Equipment, Trailers

Business & Industrial > Restaurant & Catering > Concession Trailers & Carts > Concession Trailers

Business & Industrial > Healthcare, Lab & Life Science > Imaging & Aesthetics Equipment

Business & Industrial > Industrial Supply, MRO > Fork Lifts & Other Lifts

Business & Industrial > Manufacturing & Metalworking > Manufacturing Equipment

Business & Industrial > Manufacturing & Metalworking > Metalworking Equipment

Business & Industrial > Office, Printing & Shipping > Commercial Printing Presses

Real Estate

Everything Else > Mature Audiences

How does this change benefit sellers?
We’re making this change to better meet buyer expectations for a consistent, more secure checkout experience on eBay. This should increase buyer confidence in shopping on eBay, which should result in more buyers and increased sales for sellers.

The change will directly benefit sellers by making payments faster and more reliable, enabling sellers to ship more quickly and increase buyer satisfaction.

How does this change make payment to sellers faster?
Electronic payment methods give sellers more immediate access to funds. This allows for faster fulfillment and shipping, which should increase buyer satisfaction and the detailed seller ratings they leave for sellers. Of US transactions paid with PayPal, 25% were paid within 5 minutes and 73% within 24 hours.

How does this change make payment to sellers more reliable?
Using online payment methods lowers unpaid item rates. eBay listings that don’t accept PayPal or credit cards are more than twice as likely to experience an unpaid item than listings that only accept these payment methods. PayPal will also be protecting all US sellers on eligible transactions through its improved seller protection at no additional cost, with no annual coverage limit.

How will the change increase buyer confidence?
Buyers will have a more consistent and secure payment experience on eBay. Right now, 1 out of 5 eBay transactions send buyers off eBay to complete their purchase. Buyers’ experiences vary greatly depending on the seller and their payment provider. This lowers buyer confidence in eBay and leaves buyers more vulnerable to online fraud. By using only integrated electronic payment methods in eBay checkout, buyers will be able to stay on eBay to pay.

Buyers will also have fewer bad experiences, and if something does go wrong, they will have more recourse. Buyers who pay with a check or money order on eBay.com today are 80% more likely to file an “item not received” dispute, and 50% more likely to leave a negative feedback than buyers who pay with PayPal or a credit card. Starting in late October, eligible items paid with PayPal on eBay.com will be covered by PayPal Buyer Protection with no coverage limit and at no additional cost, and all other approved electronic payment methods’ services will also include consumer protection.

Is eBay planning to eliminate third-party checkout?
Yes. We realize that checkout services offered by eBay Certified Solution Providers are valuable services to our sellers. Our plan is not to disrupt these services but to work closely with these providers to integrate them into eBay checkout in 2009. Ultimately, it’s eBay’s goal to have buyers always pay for their purchases within the secure confines of eBay.

What about Google Checkout, Checkout by Amazon or Amazon Flexible Payment Services? Will these payment methods be offered?
No. The electronic payment methods available on eBay already provide security and protections and are already used by the vast majority of our buyers and sellers. eBay will offer several other electronic payment options in addition to PayPal, namely ProPay to start, with more electronic payment providers to be added in coming months. Google’s and Amazon’s products and services compete with eBay on a number of levels, so we are not going to allow them on eBay.

Do these changes affect all eBay sites?
These changes only affect the U.S. eBay site. Check other countries’ individual sites for more information and updates.

What is eBay doing to educate buyers about these changes and keep them shopping on eBay?
The vast majority of buyers already use the approved electronic payment methods to purchase items on eBay, and these changes won’t affect their shopping experiences on eBay. eBay plans to educate and provide incentives to buyers who are heavy check or money order users to retain them. In addition, starting in late October, eligible items paid with PayPal on eBay.com will be covered by PayPal Buyer Protection with no coverage limit and at no additional cost. See eligibility.

If I already offer one or more of the approved payment methods, what do I have to do to comply and when will I need to make changes to my listings?
If you already offer only the approved electronic payment methods to your customers, you’re already meeting the new requirements. If you offer one or more of the approved electronic payment methods and methods no longer allowed, you’re fine. Starting in late October, your listings will only display the allowed methods. You will need to remove any reference to the prohibited payment methods from your item descriptions.

What if I only accept checks, money orders or other payment methods that will be prohibited?
By late October you’ll need to do at least one of the following:

Add PayPal as a payment method to your listings. This can be done through your seller preferences page in My eBay.

Sign up with ProPay to offer this electronic payment option to your customers. We are also working closely with additional electronic payment providers to add them to our approved payment providers list. Learn more.

Accept credit or debit cards through your Internet merchant account.

What if I don’t take at least one of these steps by late October, 2008?
You will not be able to list new items or relist using the same templates. Your current listings will remain on eBay.com until they end. Good ’til Canceled listings will be displayed on eBay until they come up for relisting at the end of 30 days.

Do I have to remove references to prohibited payment methods from my templates and item descriptions?
Yes, you must remove references to prohibited payment methods from your templates and item descriptions. This will not be done automatically. If prohibited payment methods are included in your item description, your listing will be in violation of the new Accepted Payments Policy.

What is the deadline for removing references to prohibited payment methods from my templates and item descriptions?
We encourage you to remove any references as you update your listings and listing templates between now and October 2008. We know that this is a busy time of year for sellers, so we will wait until January 15, 2009 before we begin insisting on the removal of prohibited payment methods from item descriptions.

What payment methods can a buyer choose when paying on pickup?
Buyers may choose whatever payment method seller and buyer agree to when they pay on pickup, including checks, money orders and cash. We encourage sellers to specify in their listing description what payment methods are acceptable if a buyer pays on pickup. Also note that sellers may not select “pay on pickup” as a sole payment option in their listing. At least one of the approved electronic payment methods must always be an option for buyers.

Is there an easy way to change my listings?
Yes. You can remove prohibited payment methods through your seller preferences page in My eBay.

What should I do if a buyer demands to pay with checks or money orders?
We know that some buyers will still want to pay with checks and money orders, even after this policy change goes into effect. When this happens, explain to your buyers the benefits that come with electronic payments:

More secure payments

Faster delivery of their purchases

More protection in case anything goes wrong.

Some buyers may be anxious about online payments or may not have a bank account. In these cases, suggest that they try using a prepaid debit card.

What should I do if I have long-standing, repeat customers who insist on paying with checks or money orders, even after I explain the benefits of electronic payments and offer suggestions?
We know this may happen occasionally, and if you accept checks or money orders from these customers a reasonably small percentage of the time, this will not be a violation of the new payments policy. However, we will not allow abuse of the new policy and will be watching for sellers who accept a significant amount of prohibited payments. Remember also, you can refuse to accept these payment methods. If the buyer doesn’t pay, you can file an unpaid item (UPI) complaint. Buyers who insist on paying with these prohibited payment methods in a UPI claim will lose the claim and will not be allowed to leave negative feedback.

What happens to my feedback if a winning bidder refuses to pay using the payment methods specified in my listing?
If the buyer refuses to pay using the payment methods specified in your listing, file an Unpaid Item dispute (UPI). If the buyer fails to respond to eBay’s requests for more information through the UPI process, provides an inadequate response such as nonsense words, or insists upon paying with an unapproved payment method, any negative or neutral Feedback left by the buyer will be removed.

What if a buyer threatens negative Feedback to demand payment by a method not specified in my listing?
You should immediately report the buyer to eBay. If there is clear evidence of undue pressure, eBay will take action. If a buyer shows a pattern of malicious behavior, eBay will most likely suspend the buyer and any negative or neutral Feedback the buyer left for any sellers will be removed.

What will happen if I ask a buyer to use a prohibited payment method?
Requesting prohibited payment methods from your customers either by email or in your item description is a violation of the new Accepted Payments Policy. Violations of this policy may result in:

Listing cancellation

Forfeit of eBay fees on cancelled listings

Limits on account privileges

Loss of PowerSeller status

Account suspension

If I don’t already accept PayPal, how do I go about doing so?
Learn more about how to create a PayPal account and the many benefits of accepting PayPal as payment on eBay.

How can my buyers pay for items over $10,000?
In late October, 2008, PayPal will enable payments of more than $10,000. For a limited time starting in October, eCheck pricing for sellers will remain capped at $5 on transactions over $10,000. This will not apply to purchases of vehicles in eBay Motors, capital equipment in the Business and Industrial category, the Mature Audiences category or the Real Estate category.

What other improvement to PayPal are coming?
Concurrent with and prior to the changes in late October, PayPal will be making many improvements for eBay customers. In addition to making PayPal safer with expanded Buyer Protection and Seller Protection, PayPal will also be faster and easier to use on eBay.

Easier eChecks for buyers and sellers

Making it easier for buyers who do not have a PayPal account to pay directly with a credit card if a seller accepts PayPal

Simplifying checkout for buyers who forget their PayPal password

Simplifying PayPal registration for sellers

Making it easier for buyers to complete high-priced transactions.

What is an Internet merchant account? How do I get one?
An Internet merchant account is an account that allows sellers to receive credit card payments from online customers through a secure payment gateway to a credit card processor. You can start an Internet merchant account by contacting your bank, or by contacting a merchant credit card processing company. Transaction fees may vary, so compare several options before you open an account.

I have an Internet merchant account. How do I accept payments? Will this change in October?
To accept direct credit and debit card payments from your buyers to your Internet merchant account, simply add credit card as a payment option to your listings. You may also want to offer additional checkout instructions to let the buyer know how to send their credit or debit card information to you.

When will direct credit card payments to my Internet merchant account be integrated into eBay checkout?
Sellers with Internet merchant accounts will be able to accept credit card payments directly through eBay checkout in January 2009. This means that your buyers will be able to directly enter their credit card information securely in eBay checkout and their payment will be directly routed to your Internet merchant account. This option will offer a more convenient and secure option for your buyers and greater efficiency for sellers.

How will direct credit card payments to my Internet merchant account work and what do I need to do to use this option?
In checkout, buyers’ credit card information will be sent securely to the seller’s merchant credit card processor via the Payflow Payment Gateway. To take advantage of this option, sellers will need to have several things in place:

An existing Internet merchant account with their bank or credit card processing company.

Your processor account information from your Internet merchant service provider.

An account with Payflow Payment Gateway. This is a FREE service for eBay sellers, and can be established through a link displayed in your seller preferences page in My eBay starting late this year.

When are direct credit card payments a good option?
This option may work well for sellers who already accept credit cards in their online and offline stores, as this will allow them to use the same credit card processor. There are usually additional sign-up, monthly and transaction fees for Internet merchant account services. Consider these one-time and recurring expenses and compare rates and services from several providers before you sign up.

Are there extra fees if I accept credit cards through my Internet merchant account on eBay?
No. There are no additional charges by eBay if you accept credit card payments directly through your Internet merchant account on eBay. In fact, some sellers may save on gateway fees for eBay transactions by using Payflow Payment Gateway as their credit card payment gateway. Check with your Internet merchant account credit card processor for their schedule of transaction fees, as this will vary depending on your agreement with them.

I don’t have an Internet merchant account. Can buyers still pay for my items with a credit card?
Yes. Your customers can also pay with their credit cards through PayPal, or if they are new to eBay or PayPal and do not yet have an eBay or PayPal account, they can pay with credit card as a guest member of eBay or PayPal.

How can I accept payments through ProPay and other electronic payment providers eBay will be adding?
You’ll need to sign up with these payment providers first to accept payments through them. Starting in September, when you sign up with these payment providers, you’ll be sent through eBay’s authorization process for third-party service providers. You’ll be asked to give permission to the provider so they can process your payments. After your account has been set up, you’ll need to add these payment methods to your listing in Sell Your Item (SYI) or another listing tool. Fees and services may vary, so visit their websites for more information about these alternative payment options.

eBay’s moves to a “PayPal”-only business model were first seen in the Australian market, as reported in these articles, and then began to be reflected in other developments:

Below is an excerpt from the policy update quoted above that I find the most interesting:

Google’s and Amazon’s products and services compete with eBay on a number of levels, so we are not going to allow them on eBay.

In the dispute over “PayPal-only” in Australia, the move by eBay was characterized as “anti-competitive” by the Australian Competition and Consumer Commission, with eBay’s retort to the ACCC’s objection as one that “undermines online consumer protection”. With these developments in the U.S., eBay has clearly and openly blocked competition on their site and sited competition as a reason for prohibiting alternative electronic payment methods.

Jason De Bord