eBay and PayPal, long-time partners in the e-commerce industry, have ended their 15-year relationship. eBay announced last Wednesday that PayPal will no longer be its backend payments service provider. Netherlands-based Adyen will gradually replace PayPal.
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. PayPal will cease to process card payments for eBay at that time.
This is a big blow to the world’s largest online payments company. PayPal’s stock fell as much as 12 percent after the news broke out. In 2014, eBay was responsible for more than 30% of PayPal’s revenues.
PayPal and eBay started their partnership in 2003, a short time after eBay acquired the company for $1.5 billion. eBay has since then spinned off Paypal into a separate company in 2015.
It seems that eBay wants to streamline its checkout process to enhance the user experience, similar to what Amazon and Alibaba did. The move will give customers more payment options, since Adyen supports more than 200 payment options.
“We believe that we can offer a more seamless experience while giving buyers and sellers more choice for payment and payout options,” eBay CEO Devin Wenig said.
However, don’t expect PayPal payment buttons to disappear from eBay anytime soon. You can still pay for your purchases using PayPal, but it will be relegated to the background. PayPal will no longer be featured ahead of credit and debit card options. It will also stop processing card payments for eBay.
So what does this mean for the future of PayPal?
While Paypal’s stock fell slightly with news of the development, we can expect the company to recover. The Internet giant recently signed agreements with large companies such as Walt Disney and QVC. eBay executives revealed that PayPal’s eBay volume was growing slower than its non-eBay volume.
With a market cap of over $100 billion – twice that of eBay – PayPal has little to worry about.