Two Giants Part Ways: eBay Drops PayPal as #1 Payment Processor

According to eBay, their operating agreement with PayPal “has not been extended and will not be extended.” EBay says that this decision to drop PayPal as its main payments processor is a move that will benefit both buyers and sellers. PayPal COO Bill Ready even contended that eBay’s decision to leave the company will be good for PayPal in the long run.

At the end of January, eBay announced its plans to use smaller European competitor Adyen to process payments on the back-end, after its original partnership with PayPal runs out in 2020. Adyen has a number of high-profile clients, including: Netflix, Easyjet, and Uber. In a blog post, eBay explained to consumers that they will be able to pay without leaving its website. In addition, sellers will enjoy lower processing costs.

Although eBay has signed an agreement with Dutch firm Adyen, buyers will still be able to use PayPal on the site until at least 2023. While PayPal will still be a payments provider option for eBay, it simply won’t be processing certain transactions that it was before. For example, transactions that involve entering in credit card information (focus is shifting to PayPal transparent redirect).

While this separation is significant, it is not a devastating situation for PayPal as some media reports have made it seem. Under the new terms eBay and PayPal agreed upon, which will last until 2023, PayPal will be free to work with other marketplaces and offer the same level of payments – potentially allowing it to process more transactions.

Bill Ready referred to eBay’s spin-off of PayPal into its own publicly-traded company in 2015, “This was always the plan since PayPal and eBay separated.”

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