Methods of Payment on eBay

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Methods of Payment

There are several options for getting paid, or paying for an item on eBay. Some are more secure than others and the charges vary. In general the more secure a service is, for the buyer, the more expensive it is. In most cases it's down to the seller to cover any charges for receiving payment, however it is the seller's decision on which methods of payment he/she will accept. Here I have briefly explained each payment method and it's pros and cons.

Bank Deposit

As the name suggests, this is simply a deposit made by the buyer into the sellers bank account. There is no charge to the seller or buyer using this method. If the buyer choses to use a net banking service to conduct a direct transfer they may be charged a small fee, depending on which bank they use.

The problem with making a bank deposit is that there is little security for the buyer. i.e. it is not easy to prove that the seller has received the money, so, in theory the seller could deny being paid. However, in my experience with eBay, both as a buyer and seller, I have never had this problem. A bank deposit may also take several days to clear, which is not so much of a problem but can slow down the process.


Paypal is eBay's cash handling service. It enables the buyer to pay immediately using a credit card. It is free for the buyer to use but the seller incurs a fee for using the system. Paypal is secure, well known and can be used worldwide.

One drawback as a seller is that any payments you receive do not go directly to your bank account. You simply accrue credit on your account and when you want to have this money transfered to you (so that it is accesible) it can take up to a week before appearing in your account. On the flipside, there is no hesitation in taking money from your credit card when you need to make a payment.

Paypal is good for receiving payment for inexpensive items (say less than $100). If you are selling something worth more than this I would advise using another method of receiving payment else you will be paying a significant amount in fees.

As a seller you have to make a decision between accepting Paypal (and therfore paying the fees and waiting to receive you money), or not accepting Paypal (and facing the possibility of losing potential bidders who prefer security).


This involves a third party company acting a 'middle man' for the transaction. The company takes the payment and holds it until the buyer has received the goods at which point it sends the payment to the seller. This is a very secure way of making a transaction, however it is quite expensive (approx. USD$25 minimum). For this reason an escrow service should only be used for expensive items (such as cars). Escrow companies can be found by a simple search of 'escrow' on google.

This is a fairly new organisation who operate in a similar way to Paypal. The fees are less than Paypal and I have not heard of any complaints. Your money is, in theory is safer than in other cash handling services as they are registered bankers and therefore are governed by laws which do not apply to Paypal (not registered bankers). On the other hand, they are a fairly new company so not many people know about them or wish to trust them with there money. Keep an eye out for them in the future - the longer it operates successfully, without complaint, the more widespread the use of them will become as they build a reputation.

Which method is best for you?

It comes down to finding a happy medium between buyer security and minimum fees. The last thing you want is to be losing money in fees to services that you could do without. Build your reputation by gaining positive feedback and more buyers will feel secure in making a bank deposit when paying you. It must be remembered though that if you choose to not accept payment using a method that provides guaranteed security to the buyer that you may be losing potential bidders and therefore be losing out anyway.
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