PayPal Adds New Functions, May Be Preparing for Spin Off From eBay

by Ben Jackson 0

PayPal has grown from being a support company to ecommerce site eBay into a payments powerhouse in its own right. The company has launched One Touch, payments platform that lets people make payments inside of mobile apps with PayPal once they have logged into PayPal on their device. This will make it easier for shoppers to make purchases without needing to enter user names and passwords, according to Mobile Commerce Daily.

The move marks a significant advancement for eBay-owned PayPal in the increasingly competitive mobile-payments space, where players like Amazon and the major banking companies, are also seeking to gain traction. One Touch offers similar functionality to the Venmo Touch service offered by PayPal’s Braintree division, but on a much wider scale due to PayPal’s reach.

As this product moves to add to PayPal’s competitiveness, it may be getting ready to separate from its parent, according to press reports. The Information (subscription required) says that new CEO candidates are being told that eBay may spin off PayPal.

Ebay has been telling potential recruits for the position of PayPal CEO that it’s considering spinning off the payments business as soon as next year, according to two people briefed on the conversations. The search for a new head of the unit began in June after former PayPal CEO David Marcus said he was leaving for Facebook.

BetaBoston, picking up on The Information’s story, notes that PayPal has a Boston-based offices, a business incubator, and has made acquisitions in the area’s tech companies.

Those initiatives include go-to-market activities (such as selling to agencies and big companies), product engineering and design, and PayPal Here (the company’s mobile credit card processing business, a Square competitor). PayPal employed 160 in Boston as of last fall.

These show how PayPal has been developing its payments business into new areas and adding technical capabilities.

While a spinoff would likely be designed to gain more value for shareholders out of the company, it remains to be seen whether eBay would retain a controlling interest in the company as Safeway did with its spinoff of Blackhawk Networks. Having the currency of its own stock could give PayPal additional capital to invest in development and acquisitions. The added independence and capital may give it a greater ability to develop into a new payments network that competes with the traditional players.


Overview by Ben Jackson, Director, Prepaid Advisory Service

To read the full story, go to Mobile Commerce Daily