August 24, 2010, 4:00 PM

EBay to phase out third-party checkouts

The online marketplace plans to enhance its own payment services.

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EBay Inc. will end its support of third-party checkout services after June 30, 2011, meaning retailers that sell through the site and rely on other vendors for payment services will have to use the company’s proprietary checkout technology.

Merchants use third-party checkout services to, say, calculate required sales taxes or offer various shipping and payment options. However, fewer than 10% of sales on eBay.com go through third-party checkout, says eBay.

To coincide with the move, eBay says it is bolstering its checkout service.

 

 

“For those sellers who do use third-party solutions, eBay checkout is being enhanced with key functionality including advanced tax reporting, more credit card integration, and advanced shipping solutions,” says Todd Lutwak, eBay’s vice president of seller experience, in an announcement posted today. “We are also working closely with each service provider to ensure a smooth transition to eBay checkout.”

Next month eBay will add a premium sales tax calculator for high-volume sellers, and improved credit and debit card integration for merchants, Lutwak says.

Retailers that rely on third-party checkout to sell goods on eBay should not worry about changing payment systems during the holiday shopping season, says Scot Wingo, CEO of ChannelAdvisor Corp., which helps retailers sell online. “We have to wait for eBay to implement all those things,” he says, adding that eBay may decide to charge for the new features now provided through third-party checkout services.  

The reason eBay is phasing out third-party checkout is to ensure  buyers have fast and consistent checkout, and to support increasing sales via mobile devices. “Third-party checkout services may not work on mobile devices, a fast-growing platform for eBay transactions,” the company says. eBay also says that consumer tend to complete checkout less often, and fail to pay for items more often, for purchases made through third-party checkouts.

eBay is following in the footsteps of such companies as Amazon.com and Buy.com that rely on their own checkout technology instead of tools from vendors, says Eric Best, chairman and CEO of Mercent Corp., which facilitates retailer sales through online marketplaces like Amazon.com and eBay.com.

He says eBay likely made the change more from the desire to own all transactions made through its site than the possibility of gaining more revenue through payment processing. “This is reflective of a strategic move that’s motivated by ownership of the customers and the transaction and the associated data,” he says.

 

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