EBay drops Paypal for new payment processing partner Adyen

E-commerce giant eBay has revealed plans to sever ties with PayPal as its payments processing partner after reaching an agreement with Dutch startup Adyen, in a move that one online retail expert says will benefit Australian small businesses that sell through the platform.

In a statement released on Wednesday, eBay said it will not be renewing its current agreement with PayPal, which is set to expire in mid-2020. However, PayPal will still be offered as a payment option until 2023.

EBay claims the switch will benefit both sellers and buyers, with promises of lower payment processing fees for vendors, a streamlined shopping experience and a greater number of payment options at the checkout.

Minor changes to the payment interface will begin in the second half of this year for North American shoppers, with the majority of eBay marketplace customers expected to be transitioned to the new system by 2021.

As part of the platform’s current arrangement with PayPal, eBay shoppers are redirected to a PayPal website in order to pay for goods online. The switch to Adyen defeats the need for a second webpage and eBay will act as an intermediary service between shopper and payment platform.

“In a rapidly changing and competitive e-commerce landscape, shoppers expect to be able to both shop and checkout on the site on which they transact,” eBay said in a statement.

PayPal was spun off from eBay 2015 but continued as eBay’s primary processing partner. PayPal’s stock price has decreased significantly since the announcement was made, whereas Reuters reports eBay shares have reached an all-time high.

Adyen is currently the choice for payment processing by Uber, Netflix, Etsy and Spotify. The privately held company was founded in 2006 and was predicted to be worth around $US2.3 billion ($2.86 billion) in 2015, according to the Wall Street Journal.

Changes to payments commencing mid-2018

Over the transition period, businesses should expect to see sales information and analytics in a streamlined dashboard on eBay’s website.

During the transition from PayPal to Adyen, businesses and vendors will not need to change their accounts, however, they will be required to provide additional data in order to enable payments on their account.

SmartCompany contacted eBay to understand what data will need to be provided, but did not receive a response prior to publication.

Paul Greenberg, founder of the National Online Retailers Association, believes this is a good step for small business vendors on eBay.

“EBay is giving its customers and stakeholders a fresh choice and experience, with Adyen, who without doubt are one of the bright lights on the payment scene and the rise in eBay shares reflected that excitement,” Greenberg tells SmartCompany.

“For the PayPal team, probably disappointing news, but PayPal’s share price has had a stellar run since 2015, reflecting the fact that it is an independent and dynamic payment innovator … expect them to come back stronger with new products, plans and partners.”