In the morning news on May 12, it was reported that the US e-commerce platform eBay will provide loans to merchants on its e-commerce platform in the UK, challenging traditional banks and PayPal, which was previously affiliated with the company.
“We believe that this field is full of innovation. Internet companies have a lot of demand for better services, but they have not been satisfied.” said Murray Lambell, general manager of eBay UK. “We think eBay is very suitable for solving this A status quo.”
The company will announce on Wednesday the launch of a new “eBay Seller Capital” project (CEBS), also known as the “Landmark” project, and it will be the company’s most important step in the financial services sector so far.
CEBS will initially cooperate with online lending company YouLend to provide 500 to 1 million pounds (approximately US$700 to US$1.4 million) loans to 300,000 small and medium-sized enterprises that have settled on its UK e-commerce platform .
Rambel said that eBay is also further developing other loan projects, targeting larger companies , and is expected to announce it in the next few months.
This project is closely watched by mainstream bank executives, who have been worried that large technology companies may have a potential impact on the field. Even though eBay is far inferior to technology giants such as Amazon and Apple, the company’s $41 billion market value is still about 50% higher than NatWest, the UK’s largest small business lender.
Virgin Money CEO David Duffy said last week that the entry of large technology and payment companies into the banking sector is more worrying than financial startups.
Another traditional bank executive said that it is “natural evolution” for companies such as eBay to enter the loan industry. After all, they have huge data and have established relationships with small companies, which have inherent advantages over financial technology startups.
He said: “This competitive threat is more severe for us, and we are very clear about it.” But he also added: “The disadvantage of technology companies is that banks are not their core business.”
Amazon opened a similar business as early as 10 years ago to provide loans to merchants who settled on its platform, but the progress of the project has been slow in recent years. After two years of slowing down, the growth rate of its outstanding loan balance rebounded in 2019, but it fell into a downturn again during the COVID-19 pandemic.
Rambel said that eBay will cooperate with professional companies instead of developing its own internal credit business . “We can cooperate with companies that provide solutions, which can provide them with unparalleled data and information to help them obtain the highest quality loans.”
The company has previously worked on a smaller scale with Asto in the UK, a loan company backed by Spanish bank Santander.
Before eBay decided to enter the financial services field, the company had completely separated from the payment service PayPal, which was spun off from the company in 2015. PayPal continued to handle many payment transactions for eBay until last year, but eBay said that it is “strategic” to directly control the user’s checkout process.
Rambel said that this change has allowed eBay and its partners to gain “deep insights” into more customer and seller data, helping it make better lending decisions.
PayPal is also actively expanding its loan business, and the outstanding loan balance in the first quarter reached US$2.7 billion.