PayPal and eBay now separated

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Online retailer eBay’s subsidiary PayPal has now split off into a separate company.

The move was announced in September 2014 but has just come into effect in what industry experts say is a play to take on competition from payment services from Apple and Android.

The companies, which are now two of the most famous names in internet retailing, have traded together since eBay bought PayPal in 2002.

Major implications

Although PayPal has consistently been eBay’s fastest growing subsidiary, upcoming rival payment services from Apple and Android have forced the change to independent trading.

he decision initially came as a surprise to many industry experts amid rumours that some eBay board members had initially been reluctant to consider the change.

Customers shouldn’t expect to experience any direct changes; PayPal will continue to be used as eBay’s main payment provider.

Stock market

When PayPal starts trading on the stock market independently, eBay’s market value is projected to drop from more than $75bn (£47bn) to approximately $30bn (£19bn). This means that PayPal will be worth more than eBay.

Strong forecast-beating profits from eBay were announced for the second quarter of this year, registering net revenues of $4.4bn (£2.8bn). However, this included $2.3bn (£1.5bn) of revenue from PayPal. This was an increase of 16 per cent on the previous quarter.

Other sales

The Enterprise arm of eBay, which develops online shopping websites for retailers such as PetSmart and Ikea, has also been sold.

The sale netted the company $925m (£590m), which is less than half of the $2.4bn (£1.5bn) it paid to buy Enterprise four years ago.


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