EBay ditches Paypal as preferred provider after 15 years

  • EBay ditches Paypal as preferred provider after 15 years

EBay ditches Paypal as preferred provider after 15 years

As the following article reports, eBay will be bringing in Adyen for some payment processing.

On Wednesday, eBay (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 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.

"In a rapidly changing and competitive ecommerce landscape, shoppers expect to be able to both shop and checkout on the site on which they transact".

PayPal was spun out of eBay in 2015 and his since been ploughing its own furrow, cutting relationships with card schemes and big technology firms in an effort to reduce its reliance on its former parent.

Adyen, which was only set up in 2006, now offers payment processing in more than 150 currencies and over 200 methods of payments, with the likes of Uber and Netflix among its other major customers.

Payment volume related to EBay was 13% of total volume in the fourth quarter last year, down from 16% a year earlier and down 19% from two years earlier, the company reported.

Fourth-quarter revenue rose 9.1 per cent to US$2.61 billion. eBay recorded a US$2.6 billion loss for the quarter because of a one-time US$3.1 billion charge from the recent changes in United States of America tax laws.

PayPal and eBay have a five-year operating agreement in place that governs the spin-off.

After doubling in the past year and closing at a record $85.32 on Wednesday, PayPal shares sank 10 percent after hours to $76.58. 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. Overall, this arrangement will not really impact the buyers and sellers that use eBay. According to PayPal spokeswoman Amanda Miller, as quoted by CNN, the company will "continue to provide a comprehensive payments solution to eBay through July 2020".