News, Education and Events Decoding Digital Payments & Fraud

News, Education and Events Decoding Digital Payments & Fraud

PayPal Looks Beyond eBay

PayPal Looks Beyond eBay

Last week, eBay CEO Devin Wenig announced on the company’s Q4 earnings call that PayPal would no longer serve as eBay’s payments processor when their operating agreement expires in 2020. The online marketplace and PayPal were pioneers in e-commerce and payments, but eBay said it will turn to Dutch e-commerce processor Adyen in 2021.

Wenig said the transition is about a more seamless experience and more payment choice for consumers. PayPal and eBay signed a separate agreement going forward so that PayPal—which was developed and grew to prominence as part of eBay and spun off into an independent company in 2015—will remain one of those payment choices.

In PayPal’s quarterly earnings call, CEO Dan Schulman characterized the split as an opportunity to serve as a payment choice on other marketplaces (like Amazon, for instance), which the operating agreement the companies signed in 2015 prohibited.

“We renewed the ‘branded’ relationship with eBay because it is far and away the most profitable element of the relationship,” Schulman told investors and analysts. “The operating agreement also restricts PayPal from partnering with the largest and fastest growing marketplaces in the world as an MOR (Merchant of Record). So, if we had simply done an extension of the full operating agreement, that would have kept that prohibition in place and prevented us from becoming a fully neutral third-party platform. And the opportunity to partner with the world’s largest marketplaces is immense.”

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