PayPal stutters as eBay scraps 15-year relationship
Digital auction house eBay is terminating a 15-year relationship with PayPal and instead turning to Amsterdam-based Adyen as its primary payments provider at the checkout.
In an earnings call with investors, PayPal CEO Dan Schulman sought to play down the impact: “Both our 2018 and our medium-term guidance already includes the anticipated economic impact of the eBay transition, which is quite manageable over a multi-year period. As such, we see no need to change our medium-term guidance. Given our long history with eBay buyers and sellers, both Devin Wenig and I believe a manageable transition and sustained relationship is in the best interest of our mutual customers.”
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. Buying and selling on eBay currently accounts for about 13% of PayPal volumes, a figure which has been going down over time as the company moves into new markets.
The switch to make Adyen the primary checkout option will take place in 2020, with PayPal dropping down the rankings to become a supplementary service.
The move is a big boost for Adyen, which in 2016 increased transaction volume 80% year-over-year, to reach $90 billion. The company has been profitable since 2011, growing its earnings from $46 million in 2015 to $87 million in 2016. It ws valued at $2.3 billion following an investment round in September 2015 that drew support from some of Silicon Valley’s biggest names, including Mark Zuckerberg and Jack Dorsey.
eBay has also begun making significant investments across its business to build the capabilities required to reduce its back-end reliance on PayPal and intermediate payments across its own platform. The company’s payments team is led by Alyssa Cutright, VP of Payments, and Jingming Li, VP of Payments Platform, to oversee the business and product development. Over time, eBay expects to have a team of several hundred business, product, and risk specialists driving its payment capabilities.
