eBay parts with PayPal to make Amsterdam startup Adyen its primary payment provider at the checkout

1 February 2018

PayPal eBay announced the end of PayPal era on its online auction website as it has plans to switch from long-term partnership with its former subsidiary to Adyen, an Amsterdam-based payment services provider, as a primary payment method offered to customers at the checkout with PayPal to be sideshifted to the position of a supplementary option. The announcement moved the shares of PayPal down 12% in the afterhours trading.

Dan Schulman, CEO of PayPal, talking to investors during an earnings call, made an attempt to pour oil upon troubled waters and downplay the significance of the impact to be caused by the break of years long relationship with the largest ecommerce player. He noted that the company’s guidance for 2018 and for the follow-up period already includes the economic impact of the transition made by eBay and the situation is ‘quite manageable over a multi-year period’.

The transition to Adyen will be finalized in 2020, and PayPal will from that moment become an alternative payment provider listed among others by eBay at the checkout. The deal is expected to remarkably boost the profits of Adyen, which has already demonstrated a sustainable growth since 2011 with its earnings increasing from $46 million in 2015 to $87 million in 2016. The company’s value was estimated at $2.3 billion after an investment round held in 2015.

Another announcement made by PayPal includes the partnership with Bank of America Merrill Lynch to allow corporate customers to initiate cross-border payments in local currencies using just their email identifier. The capability will be powered by Global Digital Disbursements of BofA Merrill Lynch, and businesses will be able to perform transactions between the United States and Mexico, France, Germany, Italy, the UK, and the Philippines.

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