Marketplace giant eBay announced last week that it is replacing PayPal with Dutch payments provider Adyen as its payments partner in what it calls a “transition to full payments intermediation.”
The change in how it approaches payments enables the marketplace to derive more value from its customer relationships as part of an evolution in its business model, Rick Oglesby, president of AZ Payments Group, told PaymentFacilitator.com.
“It’s about deepening customer relationships. When a consumer pays with PayPal, he or she forms a customer relationship with PayPal, not with eBay – and not really with the merchant, either. By working with Adyen, eBay can take ownership of those relationships, increasing its value to its customers and to its shareholders,” Oglesby said.
eBay said in its announcement that the move will give its sellers more control and a central place to manage their business. It promises an improved shopping experience and enhanced tools for its sellers.
Adyen’s geographic reach, covering more than 150 currencies and 200 payment methods, will provide buyers with greater choice at checkout, the company said.
The switch to Adyen will give eBay greater ownership over its customer information and an increased ability to monetize the payments on its platform, Oglesby said.
“PayPal was the vehicle through which eBay monetized payments for almost 20 years, and it worked well as long as eBay owned PayPal,” he said. “But once PayPal become a separate entity, PayPal ceased to be a monetization vehicle and started to become a drain on earnings. So eBay is working with Adyen to create a new payments monetization engine that eBay can own.”
As part of that new engine, eBay said it has been hiring payments industry veterans to oversee the build-out of its payments business. The company expects to grow its payments team to “several hundred” over time, it said.
eBay plans to begin enabling the new approach to payments on its platform in the second half of this year, with most of its sellers transitioned by July 2021, when the marketplace’s operating agreement with PayPal expires. It will continue to offer PayPal as a checkout option until 2023, the company said.