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After Declining Amex, Ebay to Begin Accepting Venmo

Ebay announced will now accept Payments from Venmo after cutting ties with Amex.
Image courtesy Ebay

Ebay has drawn a line in the sand when it comes to payments. After very publicly announcing last week that it would no longer accept American Express due to “unacceptably high fees,” today the online marketplace said it will be adding Venmo as a payment option in the U.S. as part of a “continued push to expand ways to pay and invest in digital natives.”

Ebay Declines Amex over ‘Unacceptably High Fees’

The email sent to Ebay users.
The email sent to Ebay users.

Ebay didn’t hold back in explaining why it was rejecting Amex when it shared the news with U.S. users last week: “Effective August 17, we’ll no longer accept American Express as a form of payment on Ebay since we have been unable to agree on terms that are acceptable to Ebay,” read an email to users sent on June 6. “You’ll still be able to use a wide variety of credit and debit cards such as Visa, Mastercard and Discover, and other payment methods such as PayPal.”

It’s worth noting that PayPal started as an offshoot of Ebay, to facilitate easier payments on what was, 20 years ago, one of the first digital marketplaces. PayPal acquired Venmo in 2013 and then was spun off from Ebay into its own company in 2015, so today’s announcement represents a real full-circle moment for the marketplace. It’s also a further slap in the face for Amex, which is known across the industry for its high processing fees.

“At a time when payment processing costs should be declining because of technological advancements, investments in fraud capabilities and customer protections by merchants like Ebay, credit card transaction fees continue to rise unabated because of a lack of meaningful competition,” said an Ebay spokesperson in comments shared with Retail TouchPoints identifying “the unacceptably high fees American Express charges for processing credit card transactions,” as the reason behind the decision. Amex did not reply to a Retail TouchPoints request for comment on the decision.

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Amex isn’t alone in facing the ire of merchants when it comes to processing fees. Earlier this year, after nearly 20 years of litigation, Visa and Mastercard reached a settlement with U.S. merchants to lower the swipe fees merchants are charged when customers use credit or debit cards, but trade associations including the National Retail Federation,  the Retail Industry Leaders Association (RILA) and the Merchants Payments Coalition have criticized the deal, with RILA calling it a “mere drop in the bucket.” 

Ebay Looks to Venmo to Connect with Younger Consumers

“Based on internal research, we know that the vast majority of Ebay customers are willing to use alternative payment options [instead of Amex] to continue enjoying buying and selling on our marketplace,” added the Ebay spokesperson.

One of those options in the U.S. will now be Venmo, with an Ebay blog saying that the addition is part of the company’s efforts to “introduce new, popular and modern payment options [that] align with the evolving preferences of today’s digital natives.” It’s certainly not lost on Ebay that younger generations, notably millennials and Gen Z, prefer payment platforms like Venmo over traditional credit cards anyway. The company also pointed out that more than 60% of its sales volume comes from mobile devices, making mobile platforms like Venmo ideal for the Ebay shopper.  

“Ebay’s payments strategy aims to deliver frictionless, relevant and safe commerce experiences for the millions of buyers and sellers that transact on Ebay every day across 190 markets,” said the blog. “The ability to pay with Venmo at checkout continues Ebay’s push toward tapping into a younger demographic with Venmo’s heavy adoption among Gen Z and millennials.”

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