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Reinvention of Spending

How eBay used the pandemic to make checking out easier

The company's head of global payments, Alyssa Cutright, sees the broader digital shift as a boon to her efforts of bringing payments in house.

How eBay used the pandemic to make checking out easier

eBay's head of global payments Alyssa Cutright tells us about consumer finance trends.

Photo: eBay

The pandemic has upended everything — even plans companies have had to upend themselves. For consumers, eBay moving to manage its own payments stack means checkout will get a little easier. For the company, it means finally having a way to expand quickly and adapt to the pandemic.

In the years following its separation from PayPal, eBay has started to bring payment processing in-house. For the company's global head of payments, Alyssa Cutright, the endgame of that multiyear process means the company can expand into new markets more easily and simplify the checkout process by offering new forms of payment. But part of her playbook to do so had previously relied on having employees on the ground to help sellers with the migration.

As the pandemic shifted the global business landscape, Cutright was forced not only to adjust her plans to ramp up eBay's migration to managed payments to fit the remote reality, but also to grapple with consumers who were rapidly changing their ecommerce behavior. The company has found ways to utilize the new data stemming from customers having more choice in the checkout to inform what buying on eBay might look like in the future.

In an interview with Protocol, Cutright discussed how the pandemic has impacted eBay's plans to manage all of the site's payments and what consumer finance trends she thinks will stick around long after the vaccine.

This interview has been edited and condensed for clarity.

The pandemic has changed so much about the way business is done; how has that translated into payments for eBay? And what's changed with how people are buying and selling?

Let me just start by giving a little bit of context on our journey. We separated from PayPal a little over five years ago, and we are governed by an operating agreement that has limited our ability to do payments. Essentially, we outsourced payments to PayPal, not just as a processor, but we would literally refer every seller that comes to sell on eBay over to PayPal to establish an account. Every time you checked out on eBay, it was actually [PayPal's] decision.

When we chose in January of 2018 to intermediate payments on our platform, we were pulling that in-house so that we could control the experience. When the pandemic hit, it was twofold for us. The expiry of the operating agreement was in July [of 2020]. We'd been restricted to only up to 10% in two markets, so we were in the U.S. and Germany as a test period. We were already gearing up earlier in the year to scale rapidly in those two markets and launch in the U.K., Canada and Australia. The pandemic was a bit of a shock to the system for our project. We had planned to be deployed on site with our local teams, so we had to shift plans very quickly.

I'm really thrilled to say that we launched on time and with our same aggressive ramp plans. Under the managed payments, we control the forms of payments, and I can actually answer that question about how customers are choosing to pay. We have immediately seen adoption of alternate forms of payment because, before, users just hadn't had the choice. We've seen a shift to cards more, we've seen a really great adoption of Apple Pay and Google Pay on those devices because it makes it so much easier to zip through checkout. And then, as we've continued to launch in new markets, we've seen new styles of paying. In Australia [for example] we launched a payment type called Afterpay, a buy-now, pay-later option where there's no incremental fee to the buyer. We've seen that really exploding. Literally overnight, we saw an enormous shift with buyers wanting more flexibility, in particular younger buyers.

What had to change launching in new markets remotely as opposed to having a team on the ground?

With our largest sellers, the teams would actually go out on site with them. They have complicated processes around running their business, including payments. Their third-party integrations may use different APIs. In legacy, they may have used different APIs from eBay as well as from PayPal or from different third-party integrations that needed to be altered because it was now all being provisioned through eBay. When you're on site, you can actually see what your sellers are doing, and you can sit down with them and walk a mile in their shoes, see how they run their business for the day and maybe see opportunities that they wouldn't describe to you remotely on the phone or through Zoom.

What's also important, being in five markets with their own languages and local customs, is you really want your local folks to be dog-fooding your product before it goes out. In our two betas, where we were able to test with 10% [of eBay's transactions] in Germany and in the U.S., we did really big events with our employees to test the product before we went to market. Luckily, we have a lot of employees that are sellers on our platform, so we were able to get a lot of great feedback, and we were able to adjust and still do that remotely. But our playbooks were based on being in a physical room.

In this transition to managing payments, you could argue that the data you're getting about consumer preferences is almost confounded by the broader shifts in shopping behavior. How do you go about analyzing those factors in conjunction with one another?

We've been in an interesting position. On the one hand, we have 25 years of data on how people shop, what they buy and how those trends have shifted. We benefit from really rich data, but there's not a lot of data on payments because the way they pay on eBay has always been through PayPal. And we have a very disproportionate capitulation to PayPal because of the fact that we were historically one company. Naturally, there was a lot more incentive to drive stickiness there.

But luckily for us, global marketplaces are not new, digital payments are not new. There's so much data out there on what preferences are, and we've really thought about edited choice. A lot of people talk about choice, and consumers will always say, "Of course I want choice." Time and time again though, when you do user research and you really put options in front of them, what they really want is edited choice. But they don't actually say that, so you have to be thoughtful about understanding your demographic, seeing a little bit ahead on trends and curating those options for your buyers.

We really look at managing payments as [giving] us the opportunity to ultimately leapfrog a lot of legacy players out there who may not have the opportunity to launch more modern stacks, or have technology that gives them the flexibility to easily introduce payment options and put the right selection out there in countries around the world.

Our focus right now is migrating our entire portfolio of sellers onto the new platform. We will wrap that up [for most sellers] at the end of next year, and we're adding new forms of payment and refining the process along the way. But as we continue to move forward, we'll have a lot more flexibility to support strategic growth for the marketplace.

As the number of markets you're managing payments in expands, how are you thinking about cross-border payments?

Cross-border is a big part of our business. Sellers from all of our major markets are really interested in reaching as many buyers as they can. Their bread and butter is selling. We work really hard to make it easy for our sellers to reach buyers all the way around the world, whether it's different shipping programs, where we take that burden off of the sellers, because you also have to solve for logistics.

The vast majority of transactions around the world still go on a card, because even if it's through a wallet — Apple Pay, Google Pay or even PayPal — you're still looking at a card behind that. There are some notable markets that are not very card-dependent, like Germany, that are very bank-based, and we talked about new installment options, and I strongly suspect as we come through the other side of the pandemic, we're going to start to see more shift. Of course, people will go back to shopping in person eventually. But I think we'll definitely see tremendous stickiness in the ecommerce world and with digital payments, which I think will then fuel more innovation on how you make that more seamless.

Cross-border payments are tough because of the regulation behind them. The Visa-Mastercard rule sets are complicated. You're talking about currency, and the government regulations and the Visa and Mastercard rules don't always mesh well together. It's a lot more complicated behind the scenes than you may imagine to facilitate those payments. But by necessity, through the pandemic, people have had to gain comfort shopping online when perhaps they haven't in the past. Maybe they shopped online, but only with a couple familiar, trusted parties. They've had to branch out, and they may even need to branch out to international marketplaces or retailers to procure whatever they're looking for. Scarcity has driven people to change their behavior.

The buy now, pay later format is something that's come up a couple times already. Are you working with the expectation that those will stick around post-pandemic?

I think it will absolutely be here long term. There are a lot of different installment models out there. We have the traditional ones where there is an interest rate. They're real credit products; they're credit-regulated. I think what's really interesting about Afterpay is that the consumer isn't paying anything at all. It's a merchant pay model. Basically the seller is paying something similar to interchanges. It's more expensive, but the merchant is financing that. And the Afterpays are just hitting the consumer's account for four $50 payments instead of one $200 [payment]. It's very cheap for them to process the payment there they're financing, the very short-term credit from a fee that they're charging the merchant. I think it'll stick around because it's really highly adopted with younger shoppers. They don't actually like credit, they use debit. And I actually just see this as an alternate tool, because it still hits their bank account. I don't think that'll fade out.

On your migration to the managed payments platform, what are the benchmarks you need to hit in 2021?

We've been mostly focused on what we call our B2C portfolio — our larger sellers that make a living on eBay. We have started to move into what we call our C2C or consumer sellers: hobbyists doing a little spring cleaning and wanting to sell off a few things. We're expanding into that side of our portfolio.

We'll be going into France, Italy and Spain the first part of the year and then will continue to round out the use cases for more payment types across the rest of our markets around the world. As we continue to move across Europe, we have a buy-online, pick-up-in-store model. We're seeing that more in the U.S. now, but historically that's just been really under-adopted in the U.S. It'll be interesting to see if that sticks post-pandemic because it's always been quite popular in Europe.

We're continuing to launch coverage of all those, those use cases. We already have over 340,000 sellers. We exceeded that in Q3 and we've continued to grow through Q4 as we're pulling more sellers onto the platform every single week. And as we exit next year, we will be entirely on the platform which is where we can really start iterating. Other than adding new forms of payment, we've really worked to try to keep our checkout experience for our buyers as consistent between the two experiences as possible. As we have all of the volume on the new platform, we will even start iterating more on our checkout process to make it even more seamless than it might be today.

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