PayPal (NASDAQ:PYPL) and EBAY (Nasdaq:ebay) have been close partners for more than 15 years, and now this relationship is about to become “past-style.”
On the morning of July 25, eBay decided to change its mind. After separating from Paypal, it held hands with apple pay and Square to provide commercial loans to users.
PayPal will still be the payment option for ebay shoppers after the existing Ebay-paypal agreement expires in 2020, but it will not be as prominent in the debit and credit card options as it is today.
PayPal will no longer handle eBay’s credit card payments.
EBay’s move is aimed at controlling more details of the payment process to make the user experience perfect.
Analysts see the move as ebay’s move to reduce costs and gain more control over its Web site.
PayPal will continue to be a payment option for ebay at least until July 2023. According to the terms of the spin-off agreement, two companies will gradually be separated.
According to the terms of the spin-off agreement, two companies will gradually be separated.
“We believe we can provide a more seamless experience while giving buyers and sellers more options to pay,” said Devin Wenig, EBay’s CEO, according to the Wall Street Journal. ”
EBay will begin accepting apple payments this fall and will offer up to $100,000 in commercial loans through a new agreement with Square。
Earlier this February, ebay announced it would terminate its cooperation with PayPal by transferring its payment processing business to the Dutch-Amsterdam payment company Adyen.
Last year, ebay’s global turnover of 88.4 billion U.S. dollars, starting this autumn, Apple payments will be on a limited basis to enter the market.
Square will focus on the financial risks of millions of small ebay merchants and provide loan services to potential loan clients. The loan comes from the Salt Lake City Celtic Bank, and ebay merchants can start making loan applications in September.
Ebay is still an important source of business for PayPal, and PayPal says the loss will be offset by helping small businesses boost sales growth in other markets and their own websites.
In April, Paypal told investors that annual payments totalled $65 billion, growing by more than 40% a year, compared with EBay’s single-digit annual growth rate.
Ebay will help Apple Pay its credibility in the digital wallet space, where Apple’s payments have been hard to accept because online shoppers are willing to use their credit cards online, and it’s not difficult to swipe them in a store.
Ebay can support some loyal iphone users with Apple, while Apple charges a small fee from platform trading.
Although eBay is an important customer of PayPal, some terms in the cooperation contract between the two parties restrict the development of PayPal market to a certain extent.
The market also expects further cooperation between amazon and eBay after PayPal’s cooperation with eBay ends. In recent years, the company has also been working hard to develop cooperation with Visa and mastercard.
EBay’s partnership with Square marks a huge opportunity for Square to provide commercial loans to millions of eBay sellers.
Since the beginning of 2014, the loan business has played an increasingly important role in the sales and profits of Square capital.
In the first quarter of 2018, Square made 50,000 commercial loans, totaling $339 million, up 35% from a year earlier. Most of the businesses that borrow from Square are stores and restaurants, and the loans are used for the day-to-day operations of opening a new store, buying inventory or money.
In 2016, Square began extending credit to businesses operating outside of the existing payment processing system, such as Upserve, a catering technology start-up company. Cooperation with large platforms such as ebay will help square compete with PayPal and Amazon, which also offers commercial loans.
On the day of the news, PayPal (NASDAQ:PYPL) plunged 14% in after-hours trading.