eBay and PayPal used to seem like such a great couple. You had one of the best ways to buy things on the Internet matched up with one of the best ways to pay for things on the Internet. What was not to like? But time and emerging technology trends haven’t been kind to eBay. Sure, it’s still a vibrant and active ecommerce community, but few would call it sexy and cutting edge.
What is sexy and cutting edge? Mobile payments, a technology that is poised to become the future of how people pay for everything, both online and in the physical world, and a market where PayPal is arguably the leader. But PayPal will need to be very aggressive and nimble to be a leader in mobile payments, especially with Apple making an impressive entry into the market with their new Apple Pay platform. And for PayPal, that once advantageous pairing with eBay was actually becoming a drag on their ability to compete.
So the news this week that PayPal was splitting from eBay came as not much of a surprise. Investors had been pushing for the move and, really, it just made good sense.
Of course, whether this moves pays off (and not just in a mobile sense) will depend on how PayPal is able to position itself in the world of mobile payments. Right now they have a good edge in both being a dominant player in payment systems and being ubiquitous both for buyers and sellers. But they face formidable challenges.
Apple Pay is easily one of the better implemented mobile payment systems we’ve seen so far and they’ve made major deals with most of the big players in payment processing. The main weakness for Apple is that they will most likely only support Apple devices. And Google is still a major player with their wallet and Amazon could make a big move into mobile payments at anytime.
Clearly, the battle lines are drawn and mobile payments will see a lot of action in the near future. Breaking up with eBay should give PayPal the freedom they need to be a major player in mobile payments. But don’t feel bad eBay, you’ll always have online auctions.
For more on the topic of mobile payments, read the Aberdeen report Purchasing Cards: Redefining Identity in the Evolving Payments Landscape