EBay, PayPal head in different directions with divorce on tap

EBay and PayPal are taking another step toward divorce. And as is the case in many such separations, one side is the winner and the other is left wondering just how things got to this point.

EBay said Wednesday that PayPal will no longer be its payments processor after the agreement between the two companies ends in 2020. EBay has signed a new, long-term deal with Dutch payments-services company Adyen, which will start handling a small amount of eBay’s payment processing later this year.

Adyen’s name may not be well-known in the United States, but the company does count Uber, Netflix and Spotify among the companies that use its technology for processing customer payments. Unlike PayPal, which in addition to providing payment services has a button on eBay sites and elsewhere so customers can use it to pay for purchases, Adyen focuses exclusively on the services that businesses use on the back end of their systems for payment processing.

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PayPal won’t disappear completely from eBay in two years, however. The companies said PayPal will remain as a payment option on eBay’s Marketplace sites until 2023. EBay and PayPal have had close ties since 2003, when eBay acquired PayPal. In 2015, eBay spun out PayPal as an independent company.

But it was obvious from the start of trading on Thursday how Wall Street viewed the new relationship between eBay and PayPal.

EBay shares rose more than 15 percent, to as high as $46.75, as the company also got a boost from an upbeat fourth-quarter report and outlook. Late Wednesday, eBay reported fourth-quarter earnings of 59 cents a share on $2.61 billion in revenue, which was in line with analysts’ expectations. The company also forecast first-quarter earnings of between 52 cents and 54 cents a share, on revenue in a range of $2.57 billion and $2.61 billion, while Wall Street had earlier forecast eBay to earn 52 cents a share on sales of $2.4 billion.

In contrast to eBay, PayPal shares fell by 6.3 percent, to $79.98.

Photo:┬áThe sign at eBay headquarters in San Jose in 2013. EBay shares surged and PayPal’s retreated after eBay said it would stop using PayPal as its payments processor in 2020. (Gary Reyes/Bay Area News Group)

 

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  • omegatalon

    No PayPal means the end of seamless secured Ebay transactions as customers and sellers may begin looking for an alternative.. although for most the answer is Amazon as people are willing to pay a little more to know that their product is new, genuine and will get delivered in a couple of days.

    I would sell my Ebay stock.

 
 
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