eBay plans to cut off PayPal as its main payments processor. That means one of the most storied partnerships in tech industry is coming to an end.
eBay and Paypal have been partners for 15 years. On January 31, 2018, eBay announced that it will stop working with PayPal as its back-end payments service in 2020. It will move a small percentage of its payments volume to a new partner later this year.
After the existing eBay-PayPal agreement ends in 2020, PayPal will remain a payment option for shoppers on eBay, but it won’t be prominently featured ahead of debit and credit card options as it is today.
Instead, Adyen will become the primary payments processor for eBay sites across the world. eBay has signed long-term contract with Adyen, an Amsterdam-based cost corporate based in 2006 that has counted international firms like Uber, Netflix and Spotify. amongst his clientele.
eBay mentioned that Adyen supports more than 200 payment methods across the world. That is very convenient for online shoppers. Besides, Adyen focuses on offering back-end cost products and services, comparable to bank card processing, to companies. Therefore, you will not see Adyen payment buttons pop up on eBay.
This change is a piece of good news for Adyen while it is not good for PayPal. PayPal’s stock dropped as much as 12 percent on the news in after-market trading.
Of course, eBay benefits from this change. It is expected to eventually add $2 billion of revenue to the eBay business because the company will start to charge eBay sellers for the payments service.
There is a chance that eBay is taking an equity stake in Adyen alongside the commercial agreement so it can benefit from the upside this will create.
It is not clear whether Adyen will make any financial concessions to win the business of a platform of eBay’s size. It is expected to file for an IPO as early as this year. There are still many unknown things about this move.
Published by Andrew Gonzalez on February 1, 2018 3:35 am and last modified on February 1, 2018 4:11 pm.