eBay is ending its long term relationship with PayPal as the former announces it is dropping the latter as its main payment processor.
The two companies have had a close working relationship for many years. The online auction website even purchased PayPal way back in 2002 fulfilling a need for a reputable payment processor. The two companies split again in 2015 with PayPal once again becoming its own publicly traded company.
The move comes as they announced in a blog post a deal with Dutch company Adyen to process payments. PayPal will continue to be a payment option for the forseeable future but will feature less prominently than before.
The switch to Adyen will lead to a more seamless payment method. Unlike the current process where customers must go to another website to make payment Adyen will process payments in the background right from eBay’s website.
eBay and PayPal have an existing deal through till 2020 so the roll-out will be a gradual process. In the second half of 2018 Adyen will be integrated on a small scale to some customers in North America. Expansion of the service will then continue throughout 2019. By 2021 eBay expects Adyen will process the majority of transactions on the website. PayPal and eBay have also reached an agreement where PayPal will continue to be an option till at least 2023.
Founded in 2006, Amsterdam based Adyen already boasts some high profile clients such as Netflix and Uber. In November 2017 Air Canada also partnered with the company to provide international payment solutions.
Unsurprisingly PayPal shares fell on the back of the news. Time will tell as to whether the payment processing giant will take a permanent hit from the loss of business.