eBay to Spin Off PayPal

December 14th, 2008 • Related • Filed Under

It’s no secret that PayPal is a huge contributor to the success of eBay (NASDAQ EBAY) but could it actually become a bank itself? Rumor has it that eBay may spin off PayPal to make plans for Bank of PayPal. Billions are up for grabs, companies like American Express (NYSE AXP) and GMAC (NYSE GMA) are already laying the groundwork for becoming banks, but could it happen to PayPal?

As it stands now, PayPal is the single largest transaction warehouse online today. PayPal is responsible for more than 10 cents of every dollar transacted online with no signs of slowing down as consumers target third party billers in an effort to protect their online security. With such a global reach what would it really mean to become its own bank?

First and foremost it would mean that they could pave the way for their own merchant services division which would shake the foundation of merchant account providers as Paypal could do great things to streamline the process. Second, it would give Paypal access to a mountain of cash readily available to financial institutions by the United States government. Last and certainly not least, it would mean that eBay would be the largest shareholder in what could be the next great IPO.

While it’s too early to tell, it would be an interesting twist of fate to see what becoming a Bank would mean to ecommerce. For my money, I think it would be a great idea and wish them the best of luck. They certainly have the resources, foundation, and technology infrastructure so it would be an interesting turn for eBay.

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There Are 2 Responses So Far. »

  1. Comment by Only Espadrilles on 10 April 2009:

    Banks are having a hard time at the moment. Many of the major banks have encountered major difficulty in recent times. Not sure who would want to be a bank in the current climate. Good luck to PayPal and eBay.

  2. Comment by Tim on 17 April 2009:

    You know how expensive paypal is currently right? Could you imagine how expensive things would be if they were their own bank? You know they would start purchasing competitors and limiting where you could go. I hear way to many bad things about paypal. No support! I would never use them for any service just for the fact they cannot give support for credit card processing.

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