For those who have always wanted PayPal to be a payment option on Amazon, you’re a little closer to having your wish fulfilled.
PayPal and eBay are going through a corporate split later this year, and though there are still multiple agreements in place that prevent them from directly competing with one another, the split opens up the opportunity for them to start partnerships with other businesses. This means that PayPal will be able to start pursuing opportunities with other online marketplaces — like Amazon.
Specifically, the two companies will still be working together for some time. The current agreements they have in place last five years, as well as one year for the transition process. During the length of the agreement, the companies can’t directly compete with each other; PayPal can’t have a marketplace for physical goods, and eBay can’t build its own payments system.
Further, the two companies must still do a certain amount of business with each other. At least 80 percent of eBay’s transactions must be done through PayPal; if the number falls below that, they will have to pay restitution. In exchange, PayPal will give eBay a commission from its percentage of sales on the marketplace above 80 percent.
While the two companies will still be connected to some degree, this new flexibility should be beneficial to both companies, as well as to consumers. The addition of PayPal to massive marketing sites like Amazon and Alibaba should be good for both companies, not to mention convenient for users. This also means that more payment options could be coming to eBay, even with the restrictions of the agreement. eBay’s announcement explained that both companies will be better off with the ability to seek different partnerships.
“As two distinct publicly traded corporations, eBay and PayPal will be better positioned to capitalize on significant growth opportunities and focus their resources on their respective businesses and strategic priorities. As independent companies, we expect eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets. eBay and PayPal also will benefit from additional flexibility and agility to pursue new market and partnership opportunities.”
Of course, this doesn’t mean that PayPal is guaranteed to come to Amazon or Alibaba — it just means that the possibility will be there once the split is official later this year. But now that PayPal has the ability to seek more business, it will be a good idea for it to do so. PayPal now faces competition from other payment services like Google Wallet and Apple Pay.
Given the demand for PayPal’s availability on Amazon, however, there’s a good chance this may happen in the near future.
[Photo by Sean Gallup/Getty Images]