Skip to main content

Why eBay's decision to drop PayPal is a good thing

PayPal COO Bill Ready contends eBay’s decision to ditch the company and use Adyen to process payments moving forward is actually good for PayPal. 


On Wednesday, eBay announced it plans to use smaller European competitor Adyen to process payments on the back-end once its original partnership with PayPal runs out in 2020 — news that initially sent PayPal stock down as much as 8.8% in one day.  

Under the original terms of the agreement, eBay uses PayPal as its primary payments provider, meaning that the majority of transactions processed on eBay were processed through PayPal. In exchange, PayPal was restricted in how it works with other marketplaces that compete with eBay. While PayPal was free to work with marketplaces that rival eBay, PayPal couldn’t offer the same degree of services to other marketplaces.

But come July 2020, that will change. Under the new terms PayPal and eBay agreed upon, which will last until 2023, PayPal will be free to work with other marketplaces and offer the same level of payments experience it once offered eBay, therefore potentially processing more transactions. PayPal will still be a payments provider option for eBay, but it won’t be processing certain transactions — transactions that involve entering your credit card information, for instance — as it had previously.


“This was always the plan since PayPal and eBay separated,” Ready emphasized, referring to eBay’s spin-off of PayPal into its own publicly-traded company in 2015.

PayPal reported adjusted fourth quarter 2017 earnings of 55 cents a share on revenue of $3.74 billion — up 26% year-over-year. For the full year of 2018, PayPal forecasts profit of $2.27 per share with revenue between $15 billion and $15.25 billion, compared with analysts’ estimates of $15.16 billion.

It’s also worth noting that while eBay transactions currently account for 13% of PayPal’s overall payments volume, that number is steadily declining, according to PayPal. And while eBay’s revenue from marketplaces continue to grow by 4%, that number is downright anemic when compared to median growth of marketplace competitors, which are growing at a 50% year-over-year clip.


Which is to say, this latest chapter in eBay and PayPal’s separation is a significant one, but not the harbinger of doom for PayPal that some media have made it out to be.

Comments

Popular posts from this blog

Snapchat finally adds @ mention tagging

Snapchat now lets you @-tag someone in your Story, creating a swipe up "more" option that shows the tagged person's name, handle, Bitmoji, and an Add button so you can follow them too. The feature could let friends call each other out in Stories, or promote their favorite influencers by making it easy for people to follow them. Snapchat now confirms to TechCrunch that "We're testing this" but refused to give more details. It's a case of Snapchat copying Instagram back after the Facebook-owned app added @ mentions to Stories back in November 2016, just a few months after Instagram cloned Snapchat's whole Stories feature. Not all users appear to have access to tagging right now, but it seems like a sensible thing to roll out. TechCrunch learned of the feature from Matt Rappaport after Dana Glidden spotted it. The news comes just after Cheddar reported Snapchat is laying of 120 employees in its engineering department in what appears to be a cost-cut...

Stallone Confirms Expendables 4

Actor-director Sylvester Stallone has confirmed that The Expendables 4 is happening. Following his breakthrough with the Best Picture Oscar-winning boxing drama Rocky in 1976, Stallone quickly transitioned into becoming an action star, beginning with box office hit First Blood in 1982, where audiences were introduced to who would soon become an iconic character John Rambo. After two Rambo sequels in the 1980s, Stallone, found himself vying for the title of action movie king against former bodybuilder Arnold Schwarzenegger, who quickly rose to prominence thanks to his Conan movies, as well The Terminator, Commando, and Predator. As both Stallone and Schwarzenegger aged, both tried different film genres (including comedy) to varying degrees of success, while other actors like Bruce Willis, Jason Statham, Jet Li, Wesley Snipes, Jean-Claude Van Damme and Stallone’s Rocky IV nemesis Dolph Lundgren took up the action film mantle. In 2010, Stallone realized the potential of bringing...

Suge Knight's fiancee jailed for 3 years for probation violation tied to rap mogul's murder case

Just months after she struck a plea deal to avoid time behind bars, the fiancee of Marion "Suge" Knight was sentenced to three years in jail Friday for a probation violation linked to the former rap mogul's pending murder trial. Los Angeles County Superior Court Judge Douglas Sortino ruled that Toi-Lin Kelly, 37, helped Knight violate a court order limiting his jailhouse phone communications by aiding him in arranging interviews with the producers of a BET documentary about Death Row Records, the record label he founded in the early 1990s. Sortino also found that she was indirectly communicating with Knight through a private investigator, violating the terms of probation he granted her in October. "To me it's pretty blatant, and frankly, jaw-dropping," Sortino said, adding that Kelly had basically slapped him in the face after he granted her probation. Prosecutors last year accused Kelly of selling surveillance footage connected to Knight'...