Its been a mixed day for Paypal. eBay, one of the world’s biggest online marketplaces, announced that it’s dropping PayPal as its main partner for processing payments in favour of Adyen. The news prompted investors to offload PayPal stock, which fell more than 11% in after-hours trading.
The two US tech companies have a complicated history. In 2002, eBay paid $1.5 billion to buy PayPal. It proved to be a very successful investment. When eBay spun off PayPal in 2015 – something investors and analysts had urged it to do – the payments company’s market value was close to $50 billion. It’s now above $100 billion.
Despite the split, the two companies’ businesses have remained tightly linked. PayPal continued to process payments for eBay and is the preferred payment method for most of the buyers and sellers on the site. But eBay is now moving to cut those ties.
The shift will start gradually in North America later this year and eBay expects most marketplace customers around the world to be using the new system in 2021.
On the good news side, Bank of America Merrill Lynch has announced a collaboration with PayPal that will enable the bank’s US commercial customers to make payments in local currencies to payees with PayPal accounts.
The payments, which are initiated through the bank’s global Digital Disbursements service, can be made from the US to PayPal account holders in Mexico, France, Germany, Italy, the UK and the Philippines.
Bank of America Merrill Lynch customers will be able to use a payee’s email address to disburse funds through PayPal, removing the need for the payer to gather and store an individual’s bank account information.