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eBay Inc (EBAY): Why This Tech Company Charges so Many Fees Like a Bank

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eBay Earnings ReportBanks get a lot of criticism for their fees. Consumers hate having to pay ridiculous fees that offer little value to them. This has caused many financial institutions to garner bad reputations both via word of mouth and in the media. Some of it is warranted; there is less trust in banks as a whole since the financial problems of 2008.

Like a bank?

So what tech company mirrors a financial titan like Bank of America Corp (NYSE:BAC)? Surprisingly, it’s eBay Inc (NASDAQ:EBAY). Have you sold something in an eBay Inc (NASDAQ:EBAY) auction recently? Well, if you wanted to include a more than a few item pictures, you’ll be charged a fee. Shipping charges are highly regulated, which is another expense to be concerned with.

Once you have sold something on eBay Inc (NASDAQ:EBAY), you’re charged a final value fee, which is calculated as a percentage of the sale price. In fact, eBay’s fee structure is so complicated that they offer potential sellers a calculator in order to get a better idea how much it will all cost to sell an item.

On top of all this, if you’re using PayPal to accept money for your auction, you’ll be charged a fee for that transaction as well. PayPal is an eBay company, acquired in 2002.

eBay versus banks

eBay’s fee structure can be more complex that what Bank of America Corp (NYSE:BAC) charges for a credit card account. For a line of credit, you normally have an annual fee, a fee if you pay your bill late, and of course interest fees if you hold a balance from one month to the next.

Of course, other than the annual credit card fee, the additional charges that Bank of America Corp (NYSE:BAC) levies could be regarded as penalties for late payment or for borrowing money. But keep this in mind: using eBay you’ll have to pay fees no matter what you do. Is that the same reality as banks? Actually, it isn’t. In fact, according to the American Bankers Association, 59% of people are able to avoid bank fees. With eBay Inc (NASDAQ:EBAY) and PayPal, there’s no way to avoid the fees.

Securing transactions

It wasn’t always like this for eBay. It used to be simple for people to sell things at their online auctions. Now that eBay is a huge company, however, it is trying to make cash at every turn. And the alternatives to eBay Inc (NASDAQ:EBAY) aren’t good. One option is Craigslist, but since that company is a non-profit, it doesn’t offer much in terms of customer service and secure transactions.

The secure transactions component of eBay Inc (NASDAQ:EBAY) is really quite important. If you ever have a problem on eBay or PayPal, there is a well-developed dispute resolution process. The same could be said for banks and the fees that they charge: you’re actually paying for security and comfort. Go for it on your own if you wish. We’ll still be here to offer you safety and security when you need it.

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