eBay has released their financial report for the first quarter of 2015. They have revealed a 4 percent increase in revenue to $4.5 billion for that period. This was slightly ahead of projections for the period. The performance was largely driven by significant growth across the payments business.
For the same period – Q1 of 2015 – Paypal reported an 18 percent increase in net total payment volume and a 14 percent increase in revenue. Over that period there were 3.6 million new active accounts added and an increase in merchant services total payment volume of 26 percent. The share of mobile payment volume had a large impact on the overall growth of the company with their share in overall transactions increasing to 30 percent during the first quarter of 2015.
It is expected that Paypal will continue to grow due to the significant growth in the online and mobile payment markets. An impact may be noticed, despite Paypal’s principle status in the market, due to an increase in competition. Competitors in the mobile payments industry include Apple Pay, Google Wallet and Samsung Pay.
The Paypal split from eBay may also impact the growth of Paypal going forward. Paypal was acquired by eBay in 2002 and used it as a platform to grow; however it was announced in September 2014 that the companies will split into independent bodies once again this year.
It is now a possibility that Paypal will become an accepted payment option on Amazon. It had not been accepted on Amazon previously due to its competition with eBay; however that will now end and Paypal will be able to work with other marketplaces.
Speaking about the split of the two companies, John Donahue, CEO of eBay stated, “Creating two standalone businesses best positions eBay and Paypal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payment landscape.”
He continued to explain that Paypal is a leader in the growing field of mobile payments and being a separate entity from eBay will allow them to stay competitive with Apple Pay, Google Wallet and other mobile payment processors. Paypal, as a separate entity, would be able to create new partnerships with retailers as they focus on continued growth and more aggressive competition.
Paypal Holdings Inc., as it will become known, will not remain the sole payment processor for eBay, although eBay will be required to process close to 80 percent of its transactions with Paypal for the upcoming five years. As part of the five year deal, Paypal will not be able to open an online marketplace and eBay will not be able to create a payment system, unless Paypal is purchased by a competitor.
Paypal currently processes in excess of 11.5 million transactions every day. With more than 162 million active wallets in 203 markets, a deal with Amazon would open up a huge world for online shoppers. The split between eBay and Paypal is expected to be completed in the second quarter of 2015.