eBay shakes up seller fees and switches to direct payments – what you need to know

Currently, PayPal is the only option eBay sellers have to receive money from sales unless they get cash in hand, so switching to using bank accounts is a big shake-up – although it's worth pointing out that buyers can continue to use PayPal and other methods to send payments.

The changes are being gradually rolled out to private sellers from now until the end of 2021.

Our eBay Selling guide takes you through how to cut fees and boost sales when flogging your unwanted junk. Plus see how to avoid fees altogether by selling on Facebook Marketplace.

How are eBay's fees changing?

This is what's happening for private sellers below (business sellers may pay slightly different fees):

• Existing system. When an item sells, eBay charges a flat 10% of the sale price, including postage. PayPal's cut is 2.9% of the final amount, including postage, plus 30p for each transaction.

  So sell something for £10, plus £3 delivery, and eBay will take £1.30 while PayPal takes 68p. This leaves you with £11.02. Alternatively, sell something for £100, plus £2.50 delivery, and eBay will take £10.25 while PayPal takes £3.27. This leaves you with £88.98.

• New system. eBay will charge a final value fee of 12.8%, including delivery, plus 30p per order, while PayPal will be cut out of the equation. This means you'll be fractionally better off.

  So take your £10 sale, plus £3 delivery, and eBay will take £1.96, leaving you with £11.04. Alternatively, sell something for £100, plus £2.50 delivery, and eBay will take £13.42, leaving you with £89.08.  

It's not just sellers fees that are changing. Here are some other points to note:

• You'll still be charged for cash in hand. A big downside is that currently some sellers avoid PayPal fees eating into their profits by taking cash in hand on collection. But eBay will still charge the new higher fee even if you accept cash. It will do this by debiting the fee from the "preferred" account you've listed on its records.

• Payments will take longer process. Under the changes, cash will now take two working days to hit sellers' accounts – unlike with PayPal, where it's instant. So if you get paid on a Saturday, the cash might not reach your account until Tuesday – although you can choose to schedule payments daily as funds are available, or weekly.

• Buyers will have more ways to pay. When it comes to buyers, not much will change except they'll now have more ways to pay. Currently, you can pay using PayPal, cash or card. But when a seller is on eBay's new payment system, it means buyers will be able to pay by Apple Pay or Google Pay too, as well as by PayPal, cash or card.

Mike Pitt, director of UK consumer selling at eBay, says the change creates an "enhanced buying and selling experience, providing sellers one place to sell and get paid, and buyers more ways to pay".

What do you need to do?

The online marketplace has been gradually inviting users to switch over to the new payments system since 2018. It says the majority of business sellers have already switched. Some private sellers in the UK have already been invited too and most will be on the new system "by the end of 2021".

You don't need to do anything until you get an invite, which will come by notification on the eBay app or by email. eBay says you just need to follow the instructions to add a bank account, which should take a few minutes. Once you change, you won't be able to get paid by PayPal.

If you don't do anything and continue to use the existing service rather than switch over, eBay warns that it has the right to restrict your ability to make new sales listings and to change or end existing listings.

How to cut eBay costs

Unless you accept payments as cash in hand, most sellers will benefit ever-so-slightly financially from this shake-up, although the obvious downside is having to wait for payments to be processed as we've outlined above.

But a way to beat the new fees is to watch out for eBay selling promotions. Roughly every fortnight, the online auction house caps fees at £1 for many sellers with its "sell for £1 max" promos. eBay's new higher fees mean these offers will be even more lucrative as you'll swerve more of the charges now – the £1 maximum charge never applied to PayPal fees. See our 11 ways to boost eBay's "sell for £1 max" promos blog for more on this.

Many people also liked that they could keep cash raised from decluttering in their PayPal accounts, using it as a piggybank for treats. If that's you, consider replicating this by setting up a separate "eBay" bank account. See our Best Bank Accounts guide for the top deals.

If the change means you'll no longer use your PayPal account, ensure you completely close it down as PayPal is set to introduce an inactivity fee of £12 a year from 16 December 2020 for accounts that aren't used for a year or more.