Ebay attacks banks and PayPal with business loans


Ebay will begin offering loans to businesses that sell through its UK marketplace, pitting the e-commerce group against mass-market banks and its former subsidiary PayPal.

“We believe this is an area for innovation and that there is a lot of unmet demand for better service for online businesses,” eBay UK Managing Director Murray Lambell told the Financial Times. “We believe eBay is well positioned to deal with it.”

The company will announce on Wednesday the launch of its Capital for eBay Business Sellers program, which it described as a “historic” move and the group’s most significant step to date in financial services.

CEBS will initially offer loans of between £ 500 million and £ 1 million to the 300,000 small and medium-sized businesses that sell in its UK marketplace, through a partnership with online lender YouLend.

Lambell said eBay is also working on other lending options for large businesses, which will be announced in the coming months.

The program will be closely watched by executives of traditional banks, who have long been concerned about the potential impact that big tech companies could have on the industry. Although eBay is a relative minnow to giants such as Amazon and Apple, its market capitalization of $ 41 billion is about 50% greater than that of NatWest, the UK’s largest small business lender.

David Duffy, managing director of FTSE 250 Virgin Money bank, said last week that “payments and big tech companies invading the banking space” were a “much more relevant” concern than fintech start-ups.

An executive at another large bank said the switch to credit was “a natural development” for companies like eBay, which have a lot of data and have established relationships with small businesses, giving them length of time. ahead of start-up lenders.

He said: “It is certainly a relevant competitive threat to us, we are very aware of this”, but added, “the downside [for tech companies] isn’t banking their core business ”.

Amazon has operated a similar commercial loan to companies selling in its market for a decade, but progress has stuttered in recent years. Growth in its outstanding loan book rebounded in 2019 after a two-year slowdown, but was again held back during the coronavirus pandemic.

Lambell said eBay would look to work with specialists rather than developing its own credit expertise. “We can partner with companies that provide solutions and what we can offer them is unparalleled access to data and information that helps them get the best loans.”

The company previously ran a more limited partnership in the UK with Asto, a lending firm backed by Spanish bank Santander.

Ebay’s decision to go more directly into financial services came after the severance of ties with PayPal, which split in 2015. PayPal continued to handle many of eBay’s payment processes through the year. last, but eBay said taking direct control of the customer’s payment journey was “strategically important.”

Lambell said the change allowed eBay and its partners to “see” more data about customers and sellers, allowing them to make better lending decisions.

PayPal has also aggressively grown its lending business, with an outstanding loan portfolio of $ 2.7 billion at the end of the first quarter.

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