What Does PayPal Spin-Off Mean for E-Commerce?
The announcement that eBay, one of the world’s largest e-commerce retailers, would spin-off leading online payment processor PayPal that it acquired in 2002, as a separate entity did not come as a surprise to many in the industry. It is anticipated that the move will provide PayPal with the ability to compete more effectively to meet the demands of a fast growing e-commerce and mobile payment industry.
The idea for PayPal to become independent gained traction with the launch of ApplePay two years ago and its ability to quickly capture the attention of a lucrative segment of the mobile payment business that PayPal has strived to dominate. Trading as a separate public company will now provide it with an influx of the additional capital it will need to compete for the mobile audience.
Consumers are likely to benefit from the PayPal-eBay split. But the future of PayPal will depend on its ability to make key decisions that not only please investors, but are in favour with customers and merchants as well. Several other companies including Apple, Amazon and Google have significantly increased their mobile payment investments to compete for the business. And with so many consumers using smart phones to pay at both online and offline merchants, the lines between e-commerce and mobile commerce are blurring together. But as a separate entity it is expected that PayPal will have a leaner management structure streamlining the process to develop innovative products and services for the mobile audience.
Having a choice of several viable e-commerce payment solutions is good for the mobile commerce industry. Competition spurs innovation, keeps prices low and improves security which is important for both consumers and merchants. Whilst PayPal is clearly recognised as the leading payment system for online merchants, its efforts to expand in the offline marketplace have been slow and not widely adopted. As a separate company, the pressure is on for it to be able to attract more offline merchants around the globe and make it easier for consumers to pay with PayPal when they check out both online and in-store.