eBay and PayPal are to part company after decades of working together. eBay is to drop PayPal as its main payment processor. This is claimed to benefit both buyers and sellers. So what is to take its place? A Dutch firm known as Adyen, relatively unknown to most people other than those involved in finance.
However, there will be no immediate change since PayPal is to continue as a payment option on eBay until July, 2023. After then, eBay sellers will have to transfer to Adyen if they wish to continue selling on eBay. One of the reasons given by eBay for this change is that sellers on eBay will have lower processing costs. An agreement has already been signed between eBay and Adyen.
Why are eBay and PayPal to Part Company?
So why has this change been made by eBay? The company claims it is to reduce costs to those who sell on eBay, particularly, merchants with eBay stores. Buyers will be able to pay without leaving the eBay website. The announcement has resulted in a 7% fall in premarket trading for PayPal shares.
The writing may have been on the wall since PayPal spun off from eBay in 2015. Since then, eBay has possibly been seeking a new payment processing partner, and it must believe that Adyen is the one. The operating agreement between PayPal and eBay lapsed this year and has not been extended. eBay announced that it would not be extended.
Who is Adyen?
Founded in 2006, Adyen is a global payment company headquartered in Amsterdam, Netherlands. It has over 5,000 customers, and it enables businesses to accept online, mobile and point-of-sale payments. Among its customers are a number of high-profile firms such as Netflix, Uber and Easyjet, and eBay is a significant feather in its cap. Over the two years from 2013 to 2015, Adyen increased its transactions from $14 billion to $50 billion.
When Does Adyen Replace PayPal?
The change will commence on a small scale in North America in the second half of this year. It will be expanded in 2019, with most of its eBay Marketplace businesses have been transitioned in 2021. It is expected that eBay and PayPal will finally part company sometime in 2023. From then PayPal will no longer be a payment option on eBay. eBay stores worldwide will then have to switch to offer Adyen in place of PayPal.