eBay Will Slowly Replace PayPal With Adyen As Default Payment Processor

EBay, the largest online auction site in the world, is shaking things up by moving away from PayPal as its primary partner for processing payments on its marketplace. The online auction house has inked an agreement with Adyen, an e-commerce company headquartered in Amsterdam, Netherlands, to take PayPal's place. It will be a mulit-year transition as eBay phases out its current arrangement with PayPal.

"EBay has signed an agreement with Adyen to be its primary partner for payments processing globally, including in North America. Adyen powers payment processing for a number of the world’s leading global marketplaces and brings to this partnership a broad global footprint with a flexible and scalable technology platform. Adyen’s wide geographic reach and experience at scale extends to more than 150 currencies and over 200 methods of payments," eBay said.

This is an interesting step in the evolution of eBay's relationship with PayPal. Back in 2002, eBay acquired PayPal for $1.5 billion. The purchase essentially allowed eBay to double-dip into its customers pockets by charging a commission on goods sold through its marketplace, and taking a cut of payments processed through PayPal. That lasted until 2015, when eBay spun off PayPal, after which PayPal continued to process payments for eBay.

Now three years later, eBay is ready to move on completely, at least from a primary partner standpoint. For buyers and sellers who prefer to use PayPal, they will still have that option.

"Additionally, eBay and PayPal have aligned on terms to offer PayPal as a way to pay at checkout on the eBay intermediated model until July 2023. PayPal will remain an important partner to eBay," the auction site said.

According to eBay, the move to Adyen as a primary payment facilitator will bring about lower costs, a simplified pricing structure, and more predictable access to funds. The company is also working on building a central place for sellers to manager their business, making it easier to track and manage sales.

This is a blow to PayPal, and following the announcement, investors reacted by sending the company's share price down more than 6 percent. However, PayPal will likely be fine in the long run. PayPal's reliance on eBay had already been shrinking, with the auction site accounting for 13 percent of the payments it handled in the fourth quarter of 2017, down from 16 percent in the same quarter a year prior.