Home After 12 Years Together, eBay And PayPal Will Separate

After 12 Years Together, eBay And PayPal Will Separate

On Tuesday, eBay Inc. announced it was splitting up into two companies—its eBay marketplaces unit and PayPal, its faster-growing payments unit.

The move, expected to be completed in 2015, essentially reverses eBay’s 2002 acquisition of PayPal.

Dan Schulman, formerly head of American Express’s online and mobile businesses, is taking a job as PayPal’s president and will become CEO of the company when it spins off from eBay Inc.

In 2002, PayPal was largely dependent on eBay for its business. Merchants on the auction site used PayPal instead of waiting for buyers to mail checks—and preferred PayPal despite eBay’s attempts to get them to use an internally developed payments service. 

See also: PayPal Slams Apple In Full-Page Newspaper Ads

Now, PayPal sees its business in mobile applications—and eBay is just one more reference customer. (It’s not even a particularly good or loyal one: The eBay Now same-day delivery service, for example, no longer accepts PayPal.)

Schulman’s first challenge will be making sure that Bill Ready, CEO of PayPal’s recently acquired Braintree subsidiary, stays put. After the abrupt departure of David Marcus as PayPal’s president, ReadWrite among others suggested Ready might become the payments unit’s next chief.

PayPal’s strategy now centers around two products: its consumer app, which lets people pay for products in stores and place orders with nearby businesses, and Braintree, whose software powers payments for mobile apps like Uber and HotelTonight. As an independent company, it will face a variety of payments competitors, like Square and Stripe. It will also have to figure out a way to work with Apple, which pointedly excluded it from the launch of Apple Pay.

eBay Inc. CEO John Donahoe, who’s been running PayPal on an interim basis, will join the new company’s board, but he won’t remain chief of eBay after the spinoff. Devin Wenig, an eBay executive, will run the independent marketplaces business.

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