eBay will Soon Shift Away from Paypal Payments to New Processing System

In the coming three years, eBay will slowly transition away from using Paypal as their main payment processor to a more integrated system run by Adyen. Paypal shares dropped more than 10% in after-hours trading on the news. Paypal was spun off from eBay as a separate company in July 2015.

Press Release

While Paypal will remain an option until at least 2023, the primary payment processor will become Adyen, a little-known Dutch payment company with 600 employees. eBay notes a few advantages of the new system including:

• more payment options for buyers (not sure exactly what this refers to, might be things for international markets, not so much for your typical American purchaser)
• lower fees for sellers (Paypal charges 2.9%, the new system will apparently be lower)
• an integrated system where sellers and buyers have everything within the eBay system without the current split-system of eBay and Paypal

The final point is likely the key point; Currently, it’s often confusing and cumbersome for both buyers and sellers to have to deal with two separate companies. Compare that with a seamless system by a retailer like Amazon, for example. It seems the goal is for Adyen to be in the background (similar to how Stripe works), and all payment interactions will run directly with an eBay payments team.

Interesting that eBay didn’t take this entirely in-house like Amazon does, presumably they aren’t big enough to effectively handle that. It’ll also be interesting to see what happens with the eBay and Paypal credit cards from Synchrony as eBay and Paypal complete their separation.

Key dates:

• The eBay/Paypal operating agreement remains in place until July 2020, five years from when the companies split.
•  eBay and PayPal have aligned on terms to offer PayPal as a way to pay at checkout until July 2023. No word on whether they’ll remain an option after that point.
• eBay will begin they payments system on a small scale in North America starting in the second half of 2018, expanding in 2019 under the terms of the Operating Agreement with PayPal.
• By July 2021, eBay expects to have transitioned all sellers to the new payments platform.