Warning for eBay Sellers with PayPal Loans


Warning: eBay sellers with PayPal Working Capital loans will need to start repaying those loans manually if they are among the sellers who are being forced into eBay Managed Payments this month.

The operating agreement between eBay and PayPal is ending 5 years after the companies split, and eBay is forcing many US sellers into the eBay Managed Payments program as early as this week.

Currently PayPal automatically deducts loan payments from the seller’s PayPal account as sales are deposited.

But once a seller is enrolled in eBay Managed Payments, PayPal will no longer be able to see eBay sales even when buyers pay for their purchases using PayPal. eBay states in a FAQ on its Managed Payments landing page the following:

Can I use PayPal Working Capital (PPWC)?
We want to ensure your transition to managed payments is as smooth as possible. Once your account is enabled for eBay managed payments, you may need to take additional steps to repay your PayPal Working Capital loan.

When eBay manages payments, your sales activity is no longer visible to PayPal. If you’re a PayPal Working Capital customer, that means that even when PayPal is included as a checkout option, PayPal will no longer be able to see your sales or be able to deduct automatic loan repayments from your eBay sales.

PayPal has a number of free and easy solutions to help you manage your PayPal Working Capital loan repayment and can also provide information about other financing options. To ensure your obligations are fulfilled, please visit PayPal Working Capital to understand the actions you need to take.

A PayPal spokesperson told EcommerceBytes that sellers are still obligated meet their PayPal Working Capital Minimum Payment requirement. Sellers can do so by manually making additional payments from the funds in their PayPal balance or from any verified bank account in their PayPal wallet.

Sellers can check their Minimum Payment requirements, which are due every 90 days, anytime by logging into their PayPal Working Capital dashboard. They can click “Make a Payment” and follow the instructions, the PayPal spokesperson explained. Sellers paying from a bank account can schedule up to 12 payments.

PayPal had raised the issue of loan repayment with eBay sellers in 2018, issuing a stark warning that they would be out of compliance with the terms of their PayPal Working Capital loans if they migrated from PayPal to eBay Managed Payments.

At the time, eBay told us it had no visibility into whether sellers did or did not have PayPal Working Capital relationships and said it could not advise them on the terms of their relationships with PayPal.

Two years later, as eBay gets ready to migrate many more sellers into the Managed Payments program, PayPal initially appeared to have a solution in mind for sellers with PayPal loans. It sent a survey to sellers describing a hypothetical Direct Deposit feature, stating, “Since your marketplace sales aren’t processed through your account with PayPal, you can’t automatically repay your PayPal Working Capital business loan. That could make it harder to be approved for a loan down the line. But don’t worry, we’ve got you covered with PayPal direct deposit.”

However, PayPal’s spokesperson told us this week the survey about PayPal Working Capital (PPWC) was to gauge interest from the seller community. “No product of this type has rolled out.”

“We are working on a way that provides PPWC borrowers a simple, seamless, and transparent way to repay outstanding PPWC balances that, though different, keeps with these same characteristics and provides PPWC customers a similar experience to what they are used to,” he said. “This method will ensure loans remain in good standing and optimizes future PPWC eligibility for those customers.”

Look for solutions in early August – eligible customers will receive an email and notice on their PayPal Working Capital dashboards when they become available.

PayPal also noted that the PayPal Capital Loans lender, which is WebBank in the US, won’t be able to assess eBay sellers’ loan eligibility based on eBay sales. “This may make it more difficult for eBay sellers to repay their loans, meet the terms of their loans, and could impact future loan offers,” the spokesperson said.

However, “PayPal is also working on a number of exciting developments to PayPal Working Capital that will expand flexibility for merchants who sell on eBay and other marketplaces.”

eBay also has plans for providing sellers with working capital loans. On its Managed Payments page under the FAQ, “What are my options for working capital,” eBay states: “Coming Soon: We will be introducing financing options from eBay Seller Capital powered by LendingPoint. Sellers can get fast, flexible and transparent financing with no origination or early payback fees.”

“eBay Seller Capital powered by LendingPoint” appears on this undated landing page, making it unclear when eBay published it. Interestingly in 2018, eBay had entered into a deal in which it would market Square Capital directly to eBay sellers.

Ina Steiner

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She’s a widely cited authority on marketplace selling and is author of “Turn eBay Data Into Dollars” (McGraw-Hill 2006). Her blog was featured in the book, “Blogging Heroes” (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.