Managing the Mandate

Recommendations for coping with eBay's electronic payments policy

by Dennis L. Prince
- Jan 26, 2009

Auction king eBay has made another bold policy change, stipulating that only electronic payments will be accepted from buyers who bid and buy on the site. While this flies in the face of a seller's preferable policy to provide payment options to customers (electronic, money order or checks), there are ways to make the most of this newest provision.

Here are some recommendations to making the best of the imposed payment methodology, both for your own business operation as well as for customers that may need your guidance in understanding your payment policy adjustment.

Recapping the payment restriction

eBay eliminated paper-type payments (checks, money orders or cash) from its electronic checkout system. Sellers will no longer be able to designate these payment methods within the item listing process, nor will eBay's invoicing and payment processing flow allow indication of such payments from the buyer's standpoint. The benefit is clearly to eBay's advantage, especially since the site gathers additional revenue when its own PayPal solution is utilized.

Rather than grouse about the site's goals in this latest gain-making move, sellers need to take action and also make some choices in how they will wring the most out of this arguably unfriendly move from the increasingly inconsistent auction site.

Will they still pay more when they can pay electronically?

The best news in all of this is that buyers who can pay via a credit card-funded transaction are still prone to spend more for items than if they paid by a finite cash-based fund. Whether they're shopping for fixed-price goods or tossing their hats into the competitive auction arena, buyers still show signs they have become caught up in the shopping and buying experience—especially if they're able to pay using credit. To this end, it has always been to the seller's benefit to accept credit card-based payments and, therefore, the method is still preferable to both sides of the transaction. Forget, for the moment, that eBay is dually profiting on PayPal-managed payments, since all credit card payment acceptance carries a cost to sellers (a cost you'll naturally factor into your overall cost versus profit planning). For now, remember that accepting electronic remittances is still a good thing.

After you've convinced yourself, convince your buyers

Knowing the benefit of electronic payment as a seller, it's up to you to properly communicate the benefits of electronic payments to your customers. Here, you need to assure your buyers of the value of credit-based payments, be they via online services or your direct merchant account. These are some of the key features you'll want to communicate:

  • Credit card payment is fast. As a seller, you benefit since you can collect payment quickly and can ship an item almost immediately. Indicate this benefit in your policy by stating that items will be shipped immediately upon confirmation of payment receipt.
  • Credit card payment is safe. Credit issuers protect buyers as a way to mitigate scams of non-shipped or deceptively described items. Sellers should encourage use of "safe and speedy" credit-based payment as a way to communicate commitment to quick and reliable service for all buyers.

Sellers can and should carefully keep the door open to buyers who prefer paper payment by simply encouraging questions regarding sales, payment and shipping policies

Fast cash for fast times

Even though the electronic payment stipulation is being made, remember that you, the seller, still set the stage and pace to ensure such payment is received quickly. Here are steps you can take to hasten—without harassing—the action on your buyer's part:

  • Establish your payment expectations in your sales policy, perhaps stipulating that payment should be received within 24 to 72 hours following completion of the listing.
  • When a listing ends and/or a sale is made, utilize the eBay invoice process or make direct e-mail contact (via the post-sale e-mail from eBay) within 24 hours to encourage buyers to take timely action. The by-product of this approach is assurance to the buyer that you're actively monitoring your business and can guarantee fast processing of their purchase.
  • Communicate directly to the buyer when payment is received and when the item is shipped. While this doesn't directly apply to the collection of payment, it will go a long way to helping you encourage a future purchase from the buyer and ensuring that future transactions can flow as smoothly as the first.

The paper's still good—at eBay and elsewhere

Here's where things get a bit tricky in eBay's seemingly evolving policy statement. If your buyer insists on paying with a check or money order, eBay will "allow" it provided you, the seller, haven't actively solicited such a payment arrangement. Yes, it seems like a legalese loophole—especially when eBay asserts it will investigate sellers who have a low transaction completion rate (that is, their listings don't exhibit that electronic payment was utilized). Nevertheless, sellers can and should carefully keep the door open to buyers who prefer paper payment by simply encouraging questions regarding sales, payment and shipping policies within listings of all items offered.

Taking a page out of eBay's own playbook, this tiptoes the same fine line eBay is attempting to balance upon. That is, to always legally be able to state it has never explicitly mandated nor unfairly restricted consumer transactions. Similarly, sellers can confidently assert the same, within eBay's listing policy.

Beyond the eBay experience, never forget the value of serving your customers outside of eBay. When you've built a loyal customer base that have indicated interest in receiving direct communications regarding the items you sell, then you're free to run that portion of your business the way you want to. Actively grow this segment of your overall online selling strategy where you can encourage and accept paper payments as you like.

Here, again, is the key to running an online business: It's your business. As for eBay, it's just another sales channel and, as sellers worldwide are properly taking note, it's no longer the sole platform upon which you should expect to exclusively rely.

About the Author

Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay…and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

Other Entries by this Author

Follow Us