Everything you need to know about the split between eBay and PayPal

By Amily Smith Last updated Mar 5, 2023

eBay will spin off its PayPal money transfer business into a separate business. The choice was made in response to pressure from activist investors, led by Carl Icahn, earlier this year; it won’t go into effect until next year.

Current CEO John Donahoe told Recode that the company has denied that the decision was made in response to these demands because he didn’t want to “make an important decision in a reactive way based on short-term events.”

However, the choice is essentially in line with what the investors wanted.

After overseeing the division of the two businesses together, Donahoe and CFO Bob Swan will step down from their positions and join the boards of either one or both businesses.

The new eBay company’s CEO will be Scott Schenkel, currently the CFO of eBay Marketplaces, and its CFO will be Devin Wenig, currently the president of eBay Marketplaces.

Dan Schulman, who was previously president of American Express’ Enterprise Growth Group, joins PayPal immediately in the position of president of the current business unit and will eventually be named the standalone company’s CEO.

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Currently, the company is valued at about $65 billion (£40 billion), of which PayPal and eBay together account for between $25 billion and $35 billion.

Donahoe claimed that eBay and PayPal “have jointly delivered substantial value creation for our shareholders.”

“We think eBay and PayPal will keep operating as independent, separate businesses. There are enormous opportunities for every business, he said.

FAQ

How will eBay and PayPal be able to work on their own?

EBay and PayPal will work together under a five-year agreement that will give PayPal a steady source of income after the two companies split. The agreement is interesting because it says that PayPal can work with competing retailers, other financial companies, and even tech companies like Google and Apple that want to get into payments.

What size is eBay by itself?

PayPal’s business has grown faster than eBay’s marketplaces business. Still, it has about 800 million live listings, 25 million active sellers, and 157 million active buyers around the world at any given time. About three out of every four items sold on eBay are new, and 80% of the items sold there have a set price. In 2014, $8.8 billion was made through eBay’s marketplace.

What will happen to the other parts of eBay’s business?

In the last few months, eBay has been doing a lot of cleaning. It sold its 28.4% stake in Craigslist back to the classified ads site a few weeks ago and settled all pending lawsuits. It also wants to get rid of eBay Enterprise, which helps other stores sell online. This division was made possible by the purchase of GSI Commerce in 2011 for about $2.4 billion. Several news sources said that eBay planned to sell that unit as soon as today. The unit could be worth between $1 billion and $1.5 billion if it were sold.

What was eBay and PayPal early collaboration?

When eBay bought PayPal for $1.5 billion in 2002, the deal was originally sold as a way for eBay to get more buyers and sellers to use PayPal as a payment service. But other than that, it didn’t seem like there were many synergies.

What size is PayPal by itself?

In 2014, PayPal handled payments worth $235 billion from 165 million active customer accounts and one billion mobile transactions. In 2014, the company made $419 million in profit on $8 billion in sales.

Could Amazon use PayPal as a way to accept payments?

Yes. As was said above, PayPal will be able to work with big marketplaces like Amazon and Alibaba that are owned by companies that compete with eBay. The only catch is that it would have to give eBay the same rates it gives its competitors. Wingo said there have been hints that PayPal is about to make a very big deal after the split, but he doesn’t think it will be with Amazon. “Amazon knows that eventually anyone could buy PayPal, so they would have to take it off the site,” he said.