Long after PayPal and EBay parted ways and became separate entities, questions remained about the future of their payments processing relationship. eBay’s sellers and buyers rely heavily on Pay Pal’s processing capabilities and payment accounts. eBay’s significant transaction volume is important to PayPal, but not necessarily a profit driver. In a press release yesterday, eBay resolved those lingering questions with an announcement that it will continue to support Pay Pal at checkout, but will move its global payment processing elsewhere:
eBay intends to further improve its customer experience by intermediating payments on its Marketplace platform. In doing so, eBay will manage the payments flow, simplifying the end-to-end experience for buyers and sellers. eBay has signed an agreement with Adyen, a leading global payments processor, to become its primary payments processing partner. PayPal, a long-time eBay partner, will be a payments option at checkout for eBay buyers. The transition to full payments intermediation will be a multi-year journey, and eBay will move as quickly as possible to complete this process within the parameters of the Operating Agreement with PayPal, which remains in place through mid-2020.
eBay’s announcement provides some detail about how they expect their new partnership will provide better solutions and improved pricing options for its sellers. Pay Pal’s stock took a bit of a hit, but they reported better than expected earnings for fourth quarter, up 30% from a year ago, so I think they will be just fine.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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