July 22, 2005, 12:00 AM

eBay requiring that all sellers using PayPal must accept credit cards

EBay’s new policy requiring all sellers who offer PayPal as a payment option to accept credit card-based PayPal transactions should benefit all sellers, says Scot Wingo, president, ChannelAdvisor Corp.

EBay’s new policy requiring all sellers who offer PayPal as a payment option to accept credit card-based PayPal transactions should benefit all sellers, including the small ones most likely to be affected by the change, says Scot Wingo, president of ChannelAdvisor Corp. The new policy takes effect Aug. 19.

“What’s driving the change is that PayPal would like consumers to have a similar experience for all sellers,” Wingo says. “Right now, it’s confusing.”

Buyers accustomed to using a credit card to fund their accounts assume that all sellers will accept card-based PayPal payment, he says.

“But there are these odd exceptions, so it ends up being a really weird thing for consumers to have to figure that out,” he says. “And it’s inconvenient-if you don’t have an account on balance or a PayPal balance and you’re used to using PayPal as a way of paying with your credit card, there’s certain transactions you can’t do because there are certain sellers that don’t take it today.”

Wingo says that large sellers-most of which already accept the credit card option-seem to be happy with the change. “The reaction we’ve heard is that they’re very much for it because they see that consumers get a little confused,” he says.

However, small sellers, who want to avoid the higher transaction fees that come with accepting card-based PayPal transactions, are grumbling, Wingo says.

Typically, small eBay sellers open personal accounts that allow them to refuse credit card payments through the processor, an eBay unit. Personal accounts carry no transaction fees.

Under the new eBay policy, sellers with personal accounts will be required to upgrade to a PayPal business or premier account-both of which allow credit card acceptance-if they receive a card-based PayPal transaction. Both business and premier accounts charge transaction fees ranging from 1.9% plus 30 cents to 2.9% plus 30 cents.

“That’s the one constituency that probably is not happy,” Wingo says. “But if they thought about it, ultimately, it’s going to make the PayPal buyer experience better, which is good for everybody.”

EBay announced the new policy in a posting last week on its general announcements page. “We had a lot of feedback from the community-both buyers and sellers-saying this practice was creating an experience that was less than optimal for a buyer,” a PayPal spokeswoman says. “The sellers that were actually paying fees and allowing buyers to pay in any way they wanted were saying this isn’t fair, this isn’t a level playing field.”

Under the change, sellers who offer PayPal as a payment option for their eBay listings must accept all forms of PayPal payment. That includes payments made via PayPal account balances, bank accounts, or credit cards, regardless of whether sellers display the PayPal logo with credit card icons.

In addition, sellers may not state or indicate in any way that they accept only certain forms of PayPal payment. Violators face listing cancellation, forfeiture of eBay fees on canceled listings, limits on account privileges, loss of PowerSeller status, and account suspension, eBay says.

While the policy is new for eBay, it’s a clarification of PayPal’s long-standing policy that gives the buyer the choice of payment option, the PayPal spokeswoman says.

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