EBay to ditch PayPal for Dutch processor Adyen; PayPal drops

eBay will no longer offer PayPal, so what are you going to do now?

The news prompted investors to offload PayPal stock, which fell more than 11% in after-hours trading. PayPal is now EBay's payments processor, meaning merchants selling on the marketplace have to have PayPal accounts to accept funds.

"The biggest surprise from the quarter was the acceleration in growth of the core U.S. Marketplace business, which sets eBay on a stronger trajectory entering 2018", Baird Equity Research analyst Colin Sebastian said. It's now above $100 billion.

In a blog post, eBay said on Wednesday it has signed an agreement with Adyen to become its primary payments processing partner.

Despite the split, the two companies' businesses have remained tightly linked. The ecommerce company plans to take more direct control of payments on its site with help from Adyen.

EBay said the shift will result in lower payment processing costs for merchants selling on the platform and greater options for buyers.

The shift will start gradually in North America later this year and eBay expects most marketplace customers around the world to be using the new system in 2021.

eBay acquired PayPal in October of 2002 for $1.5 billion.

PayPal Holdings Inc (PYPL.O) would still remain a payment option as eBay expects the "transition to full payments intermediation will be a multi-year journey".

Following its early association with eBay, PayPal is now working to establish itself as a payment processor for financial institutions, large companies and their customers - notching partnerships with companies such as Google, Apple Inc, JPMorgan Chase & Co, Mastercard and Visa. EBay noted that intermediated payments will not change much for sellers, though they will have to provide more payments-related data.

EBay has begun making investments across its business to build the capabilities required to intermediate payments.

"We look forward to powering transactions on eBay, starting in North America, and supporting their continued global growth", the Dutch company said in a statement.

Adyen has a wide geographic reach and works with over 150 currencies and 200 methods of payments.

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