Ebay takes on banks and Paypal with loans to businesses

Ebay will begin offering loans to companies selling through the UK Marketplace, competing the e-commerce group against both High Street Bank and its former subsidiary PayPal.

“I think this is a mature area of ​​innovation and I think there is a lot of unmet demand for better services for online businesses,” eBay UK General Manager Murray Lambert told the Financial Times. “I think eBay is in a good position to deal with this.”

On Wednesday, the company announces the launch of a new “Capital for eBay Business Sellers” — CEBS — program. This is described as a “breakthrough” move that marks the most important step to date for the Group’s financial services.

CEBS will initially offer £ 500m to £ 1m in loans to 300,000 SMEs selling in the UK market through a partnership with online lender YouLend.

According to Lambert, eBay is also working on additional lending options for large corporations that will be announced in the coming months.

The program is carefully watched by mainstream bank executives who have long been concerned about the potential impact of large tech companies on this sector. Although eBay is relatively minnowed compared to giants such as Amazon and Apple, its $ 41 billion market capitalization is about 50% higher than NatWest, the UK’s largest small business lender.

David Duffy, CEO of FTSE250 Bank’s Virgin Money, said last week that “a major tech company breaking into the payments and banking industry” is a “much more relevant” concern than FinTech start-ups. Said.

Another High Street Bank executive said that for companies like eBay that have extensive data and have established relationships with small businesses, the transition to lending is a “natural evolution” with emerging lenders. He said he could get off to a better start in comparison.

“It’s certainly a competitive threat to us, and we’re very alive with it,” he said. [for tech companies] Banking is not their core business. “

Amazon has been running similar business loans to companies selling through its market for 10 years, but progress has been made. Stuttering in recent years. Its unpaid loan book growth recovered in 2019 after a two-year slowdown, but shrank again during the coronavirus pandemic.

Lambert said eBay would consider working with experts rather than developing its own internal credit expertise. “We can partner with companies that provide solutions, and they can provide unparalleled access to the data and information that helps them get the best loans.”

The company has been running more limited than before partnership In the UK, there is Asto, a lending business backed by the Spanish bank Santander.

Ebay’s decision to move directly to financial services came after breaking its relationship with PayPal, which spun out of eBay in 2015. PayPal continued to handle much of eBay’s payment process until last year, but said eBay has direct control over the customer checkout process. It was “strategicly important”.

According to Lambert, this change will allow eBay and its partners to “fully understand” more customer and seller data and make better lending decisions.

PayPal is also aggressively growing its lending business, with a loan book of $ 2.7 billion at the end of the first quarter.

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