NEW YORK — PayPal’s impending split from longtime partner eBay will ratchet up its appeal to online retail competitors such as Amazon.com and give it the freedom to aggressively take on new mobile-payment challenger Apple Pay. For eBay, the challenge will be how to drive revenue without its fastest-growing division.
The move marks a 180-degree turn for eBay CEO John Donahoe, who had been adamant in spurning activist investor Carl Icahn’s call months ago to spin off PayPal. Donahoe, who will step down after the split is finalized in the second half of next year, said he now agrees that it’s the right path for both companies. With the launch of Apple Pay next month expected to reshape the mobile payments industry, Icahn said he’s “happy” eBay came around, “perhaps a little later than they should have, but earlier than we expected.”
Investors were happy too, sending eBay shares up more than 7 percent to close at $56.63 on Tuesday.
PayPal services $1 of every $6 dollars spent online. It collects fees from more than 150 million users who use the online service to send money to other users and pay for goods and services in more than 200 markets.
PayPay was acquired by eBay in 2002 for $1.3 billion, and its partnership with the popular site helped expand PayPal’s reach worldwide. The service posted 20 percent revenue growth in the last quarter to $1.95 billion — representing nearly half of eBay’s total revenue.
PayPal also has staked a claim in the small but swiftly growing mobile-payment arena and is on track to process 1 billion mobile payments this year. It launched PayPal Here and acquired Braintree and its One Touch mobile-payment service, which compete with players such as Square and Google Wallet.
