In 2002, eBay acquired PayPal for $1.5 billion, however that partnership is slated to end. On July 17th, eBay and PayPal will act as independently traded companies, but will begin trading as separate companies three days later. On July 20th, eBay and PayPal will officially end the 13-year old partnership.
eBay and PayPal worked well together. Each time I sold an item, I could print the shipping label directly from PayPal, then transfer the money to my bank right away. The downside is that if PayPal wanted to shut you down, eBay would shut you down as well.
For the next five years, eBay and PayPal will operate under an agreement that “will guarantee a reliable source of revenue for PayPal after the separation.” Additionally, PayPal can partner with competing companies. Since PayPal is free to work with other marketplaces, Amazon and Alibaba could implement PayPal for payments.
Although there are no immediate changes that will affect your business, it is important to keep the future in mind. eBay’s partnership with PayPal inhibited their ability to explore other payment options. Now that they’re no longer connected, eBay can explore other options that may streamline the process. For example, eBay may begin to allow shoppers to pay with credit card without creating an account with PayPal. Perhaps, customers may be able to use ApplePay or another competitor’s payment system.
As mentioned in some of the previous articles that we’ve written, selling on top of another platform is extremely risky. Small changes like this can affect your entire business. Anyone that’s currently running more than 80% of their business on eBay should consider shifting their business to a self-hosted platform like Shoprocket because you actually own those assets and own the entire payment system.