Ebay takes on banks and PayPal with loans to businesses
Ebay will start offering loans to businesses that sell through its marketplace in the UK, pitting the ecommerce group against high street banks and its former subsidiary PayPal.
“We think this is a field ripe for innovation and there’s a lot of unmet demand for better service for online businesses,” eBay UK general manager Murray Lambell told the Financial Times. “We think eBay is well positioned to deal with this.”
The company will on Wednesday announce the launch of its Capital for eBay Business Sellers programme, which it described as a “landmark” move and the group’s most significant step yet into financial services.
CEBS will initially offer loans of between £500 and £1m to the 300,000 small and medium-sized businesses that sell on its UK marketplace, through a partnership with online lender YouLend.
Lambell said eBay was also working on further lending options targeted at larger companies, which will be announced in the coming months.
The programme will be closely watched by executives at mainstream banks, who have long worried about the potential impact large tech companies could have on the sector. Although eBay is a relative minnow compared with giants such as Amazon and Apple, its $41bn market capitalisation is about 50 per cent higher than that of NatWest, the UK’s largest small business lender.
David Duffy, chief executive of FTSE 250 bank Virgin Money, said last week that “payments and big tech firms invading the banking space” were a “much more relevant” concern than fintech start-ups.
An executive at another high street bank said moving into lending was “a natural evolution” for companies such as eBay, which have extensive data and established relationships with small businesses, giving them a head start compared with start-up lenders.
He said: “It’s certainly a relevant competitive threat for us, we’re very alive to it”, but added, “the downside [for tech companies] is banking isn’t their core business”.
Amazon has operated a similar business lending to companies that sell through its marketplace for a decade, but progress has stuttered in recent years. Growth in its outstanding loanbook rebounded in 2019 after two years of slowdown, but was curtailed again during the coronavirus pandemic.
Lambell said eBay would look to work with specialists rather than develop its own in-house credit expertise. “We can partner with companies that offer solutions and what we can give them is unrivalled access to data and information which helps them get the best loans.”
The company previously ran a more limited partnership in the UK with Asto, a lending business backed by Spanish bank Santander.
Ebay’s decision to move more directly into financial services came after it severed ties with PayPal, which was spun out in 2015. PayPal continued to handle many of eBay’s payments processes until last year, but eBay said taking direct control of customers’ checkout journey was “strategically important”.
Lambell said the change allows eBay and partners “full sight” over more customer and seller data, allowing them to make better lending decisions.
PayPal has also been aggressively growing its lending business, with an outstanding loanbook of $2.7bn at the end of the first quarter.
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