Recently, EBay announced to split off PayPal payment service. The share holders do get a lot of profit from the decision. But for the development of both companies, it’s hard to adjust if the decision is perfect.

As e-commerce develops so fast, online payment becomes more important. Obviously everyone notices the great opportunity so competition becomes more and more fierce. Beyond Amazon, Visa, American Express, more companies enter the market. For example, Apple just establishes its own payment platform. And a Chinese company Alibaba, which enters U.S. market recently, also has a competitive payment platform called Alipay. To compete with so many powerful companies, PayPal needs to stand out in the area. In this case, operating separately is a great solution. PayPal will have more multiple choices in the future without the binding of eBay. At the same time, eBay is also able to develop diversely.

However, as PayPal develops independently, it faces several threatens. First, acquisition. Although the cost of merging is high, the profit is notable. No matter which company annexes PayPal, acquisition will help the company a lot especially in market shares. Second, the relationship with eBay. The two companies are going to operate separately, but eBay will still keep PayPal as the way of payment. So it’s necessary for the two companies to come to an agreement about cooperation.

There’s a long way for the two companies to develop and time will tell us everything.

Picture from:http://www.ecommercebytes.com/cab/abn/y14/m08/i22/images/ebay_paypal_split.jpg

Work cited:

EBay to spin off fast-growing PayPal payment service. (2014, September 30). Retrieved October 3, 2014, from http://www.cbc.ca/news/business/ebay-to-spin-off-fast-growing-paypal-payment-service-1.2782860