Paperless Payments on eBay -- the Whys and Hows Explained

It's fair to say that last week's announcement about making electronic payments mandatory on eBay has been met with mixed reaction among the selling community. Some are unhappy, that's true; others, however, understand why we're doing this, and agree that it's something whose time has come. Here's a typical "pro" post from the Community forums:

"When PayPal started, 70 to 80 percent of business was in checks and money orders... It was, and still is a nightmare...[Buyer] wins, gets to PO or elsewhere to purchase a MO, couple days go by... Mail 3-5 more... If it's a check add 10 more to clear. Often, no shipping address for MOs, no item number, no hint as to what ID is paying...2 to 3 weeks from item end.

Send an e-check, sir! Over the last few years sales paid by check and money order has dwindled to less than a percent. Pay Pal account required this year.... PayPal only,.CC only will be a good thing!"

Buyer expectations about online payment methods have changed
As this particular seller noted, times have changed. Online shoppers today expect a secure, fast and convenient online checkout and payment experience on any major e-commerce website, not just on eBay. Electronic payment methods are ubiquitous on the internet today -- unlike 10 years ago. Yet as this seller also points out, checks/money orders add time and expense for sellers, and hassle and delays for buyers.

So -- to retain buyers and turn them into repeat shoppers on eBay, eBay needs to match changing buyer expectations. With our new policy, eBay will be driven by almost 100% electronic payments, which is another important step in increasing buyer confidence in shopping on eBay.

With all that said, I'd like to share our answers to several of the most common seller questions and suggestions that my team and I have heard over the last week.

Question #1:  Why not just require sellers to offer at least one electronic payment option, while still allowing checks and money orders? Buyers would have a choice of safer payment options.

Currently, in approximately 1 out of 5 transactions on eBay.com, the buyer must go off eBay to pay. Their experience varies widely by seller and payment type. Buyers frequently complain about this experience. And the lack of a consistent experience leaves many buyers vulnerable to off-eBay payment scams. Electronic payment methods integrated into eBay Checkout, help us provide a consistent, more secure checkout experience every time a buyer purchases on eBay. 

So why not allow sellers to offer check and money order payments in addition to electronic options? Because buyers would continue to pay off-eBay and have an inconsistent checkout experience.

Question #2:  eBay stated last week that if a buyer wants to pay with check or money order, a seller can accommodate the request and complete the transaction. However, eBay will monitor for abuse. What is considered "abuse" and how will you monitor for abuse?

When the payment changes go into effect in late October, a seller cannot in any way solicit check or money order payment from a buyer. This is considered "abuse of the payments policy." eBay will take action against such abuse.

One way we'll detect abuse is by looking at reports from buyers. We'll also monitor checkout completion rates for sellers.  This, too, has generated a lot of questions from sellers. Here are some clarifications that will hopefully reassure our sellers:

• eBay will not automatically take action against a seller with a low checkout completion rate. We realize that there are many valid reasons for low completion rates.
• We won't investigate all sellers with low checkout completion rates, but only on a case by case basis. Specifically, we will check to see if the seller is soliciting checks or money orders from their buyers. If we don't find any evidence of this occurring, we won't take any action against the seller.

Question #3: What does eBay plan to do to retain check or money order buyers? What do you plan to do to prevent sellers from bearing the brunt of communicating this change to buyers?

Let's be clear. We don't want to lose a single buyer any more than sellers do. We've started an aggressive campaign last week to reach out to heavy check and money order buyers and encourage them with more education, coupons, etc. to move to safe electronic payment methods. We've already reached thousands of buyers by phone and on-site messaging.

These efforts will be ongoing –- we know we need to change perception among these buyers. We'll have more online workshops (such as our workshop on preparing for paperless payments), more phone outreach, email, on-site messaging and media interviews. We're not just changing our policy and thinking that we're done here! We'll be working hard on an ongoing basis to raise buyer awareness about the benefits of the new integrated checkout and the security of electronic payment methods.

Question #4: With integrated electronic payments, eBay will know when a buyer pays. You could use this information to improve the Unpaid Item (UPI) process. Do you have any plans to change UPI?

This has been an excellent suggestion from several sellers. Strange as it may sound, for a significant number of transactions, currently eBay doesn't know if the buyer paid or not! That's because when a buyer pays "off-eBay" we can't track that information. Eliminating paper payments and integrating electronic payment methods into eBay Checkout will definitely give us more data about almost all transactions, and we'll be evaluating ways we can improve the Unpaid Item and Item Not Received processes for buyers and sellers, so stay tuned.

For more information on the payment changes, go to www.ebay.com/payments.