Consumer Insights

eBay Pledges Loyalty To PayPal — Bans Rivals

Investor Pushes eBay To Drop StubHub, Classifieds

eBay will soon be banning PayPal rivals, ProPay and Skrill, from offering payment services to sellers on its platform.

In a letter sent out by eBay to its sellers, the company said: “Over the course of this year, eBay has conducted a global review of the use of payment methods on its websites. Given the very low usage of ProPay and Skrill on eBay’s various sites, from the week of Sept. 27, 2015, these payment methods will no longer be supported. Please revise the payment methods offered on Good ‘Til Cancelled listings to avoid them being taken down 30 days from their initial listing date.”

While the two companies officially parted ways in July, eBay’s continued allegiance to PayPal might be rooted more in the separation terms than in their combined history.

Per the five-year operating agreement signed by the duo, eBay has to process 80 percent of its gross merchandise volume (GMV) through PayPal to help ensure its continued stability. Otherwise, the company would be liable to compensate PayPal for the loss. In return, eBay makes a bonus from PayPal if over 80 percent of its GMV is processed through PayPal.

“PayPal is the simplest way to pay on eBay,” said former eBay CEO John Donahoe in an interview with MPD CEO Karen Webster. “You have 150 million consumers habituated to paying with PayPal on eBay today, and often they have their credentials stored and its one click to buy. There’s a natural momentum there.”

With the agreement in place and the strategic alliance of their business strategy, he said, “We think every merchant that sells on eBay will offer PayPal, because you’d be crazy not to. Among consumers, I think the penetration rate will continue to grow very naturally.”

Now with Skrill and ProPay on their way out of eBay’s marketplace, the two companies would reportedly also benefit from PayPal’s move to raise merchant processing fees by 32 percent for merchants processing over $3,000 every month.

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