PayPal and eBay Announce Split as Apple Pay Emerges
E-commerce giant eBay recently announced that it will officially separate from its PayPal unit, creating two individually traded companies.
EBay first acquired PayPal back in 2002 for $1.5 billion, hoping that the transaction would help boost online traffic and payment services. Despite twelve years of partnership, activist investors (namely Carl Icahn) feel that the two companies never quite reached their full potential together and have been advocating for a split for some time. It looks like the online auction site will finally cut the chord come 2015.
The new hope is that the break will allow each company to better focus on their respective areas and progress from both a financial and an innovative stand point. The announcement has raised a few eyebrows, however, with the upcoming launch of Apple Pay in October.
Apple Pay, which allows users to make secure payments straight from their iPhone 6 or other device, is working with major credit cards and banks to provide users with a safe and convenient virtual wallet. Some are concerned that PayPal could be in trouble if buyers begin to adopt Apple Pay in place of their physical cash or credit cards.
PayPal may have initially been in the running for a partnership with the mobile giant, but Apple quickly squashed any potential for a deal after hearing of a similar partnership made between PayPal and Samsung earlier in the year.
Many predict that PayPal’s first move going solo will be looking to a few major companies (like Amazon) for partnership opportunities, while focusing on building up its mobile payment services. Currently the company is set to process 1 billion mobile payments this year.