Posts by Ed Kountz from August 21, 2008

Ed Kountz | August 21, 2008, 09:00 PM
Changes on eBay: The Impact of Eliminating Paper

News this week that eBay is making several changes – notably for readers of this blog, that the service will discontinue acceptance of paper payment methods for auction purchases. Beginning late October 2008, acceptance of checks, money orders and cashiers checks will be discontinued on eBay.com. At that time, buyers will need to conduct auction purchases…and sellers to accept payments using…direct credit or debit card payments via a merchant credit card account, PayPal, ProPay, or a payment on pick-up of the item in question.

The change will not occur, according to eBay’s announcement on the topic, to “vehicles categories in Motors, capital equipment categories in Business & Industrial, Mature Audiences and Real Estate.”

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The reasons stated by eBay executives during a pre-briefing on the change earlier in the week center on consistency and security. Certainly, the interruption of flow that occurs to an eBay transaction when paying with paper is clear, and clearly applies to a small subsegment of eBay purchasers. Not surprisingly, those transactions are also more likely to trigger “item not received” disputes, and to see negative feedback on those transactions.

Five or seven years ago, such a move would have been risky…in an emerging market category, and at a time when paper was more broadly used, such a move could have impeded growth. But JupiterResearch survey data validates that paper is in decline for physical purchases, as consumers use cards more often for sub-$15 transactions and carry less cash overall. These factors, along with the establishment of other commonly used online payment options and the growth of the market, make it likely that this decision will see a few irate blog entries, but not much more than that, and is part of the longer-term trend towards streamlining, away from paper.

Beyond this announcement, eBay also announced additional changes, including a significant lowering – by more than 70 percent – of the cost to list an item in eBay’s Buy It Now™ fixed price format, effective Sept. 16 2008. The firm has also rebalanced, for most categories, the final value fees assessed on transactions, and will be offering Power Sellers an additional holiday season in the form of free shipping.

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