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In a long-awaited move, eBay announced on September 30, 2014, that it would finally spin off PayPal as its own independent, publicly traded entity. No longer will PayPal’s cofounder and former top executive Elon Musk have reason to complain, “It’s as if Target owned Visa.” eBay accounts for less than 30% of the total transactions processed by PayPal, and with non-eBay transactions growing at a faster clip, it’s only a matter of time before PayPal’s net revenues overtake eBay’s.
However, with increased competition chipping away at PayPal’s competitive advantage in its traditional e-commerce stronghold, PayPal’s continued success depends on establishing a foothold in the world of in-store and mobile payments. Mercator Advisory Group’s research note, PayPal’s Future: What Separation from eBay Will Mean, examines the strengths and weaknesses of PayPal’s current value proposition and argues that independence will make it better able to compete with the likes of Apple Pay and Google Wallet.
“The separation assuages concerns about conflict of interest with its parent eBay and enables PayPal to focus on building the omnichannel experience that its merchant partners seek in order to compete with the likes of Amazon and eBay,” comments Nikhil Joseph, Emerging Technologies Analyst at the Mercator Advisory Group and author of the report.
This research note contains 11 pages and 5 figures.
Companies mentioned in this research note include: PayPal, eBay, Apple, Amazon, Google, StubHub, and Meetup.com.
Members of Mercator Advisory Group’s Emerging Technologies Advisory Service have access to this research note as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits.
Highlights of this research note include:
- Analysis of PayPal’s operating and financial data to highlight its growing prominence on eBay’s balance sheet
- Data from the Mercator Advisory Group’s 2014 CustomerMonitor Survey Series showing digital wallet use for person-to-person and online payments
- Strategic insights into why a spinoff makes it easier for PayPal to pursue opportunities beyond e-commerce payments processing
- Why the transition to EMV will present opportunities for PayPal to play a bigger role at the point of sale (POS)