eBay has used PayPal has one of its payment processors for a long time, and that time has come to an end. eBay recently announced their strong results and launched a partnership for the purpose of retaining control of payments on its sites. This caused shares of e-commerce platform eBay Inc. to spike almost 11 percent.
eBay has brought in a new payment processor, Adyen. This will become eBay’s primary processor, and their goal is to see more transactions occur directly on eBay sites.
The Company is hoping for a strong holiday quarter due to the increase of revenue that should occur, while lowering costs. This has led eBay to be very optimistic about their future.
An analyst at brokerage D.A. Davidson & Co, Tom Forte, made a statement in saying, “There is no denying eBay has got its groove back and a series of shrewd moves by management has the company reinvigorated and well positioned for future growth”. It’s clear to see that eBay is excited for their expected future success due to the smart decisions that have been made by management.
eBay plans on a large increase in profit once their PayPal deal expires. eBay has estimated an additional $500 million in profits from the new deal they have brokered. People are very surprised of all the benefits of taking intermediary service in-house.
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PayPal’s shares have dramatically increased after the release of eBay’s news this past Thursday. PayPal shares dropped more than 7 percent in response to the news.
Transactions through eBay stand for about 13 percent of total payments that PayPal processes. PayPal has been eBay’s favorite provider for the last 15 years, and some people are saying that PayPal will remain the be a payment page option on the platform in the future.
Wedbush Securities analyst made a statement in saying, “Over time, given the recent agreements with Visa and MasterCard, PayPal will be able to scale and expand margins”.