PayPal can work with competitors after split, eBay says

eBay has agreed to let PayPal work with its competitors when it spins the payments subsidiary off into a separate public company later this year.

Were PayPal to work with the likes of Amazon or Alibaba, however, it would have to offer the same rates it offered the competing marketplaces. Such a move is likely to dramatically increase the independent PayPal’s revenue stream, so would be worth a cut to rates from its former parent company.

An operating agreement between the two companies published in an eBay regulatory on Thursday set this point out as a headline item for post-split company relations, Re/Code reported.

eBay will also be free to work with other payment companies to process payments on its marketplace. But PayPal’s position as main payment processor has been secured, since eBay will be penalised if the percentage of transaction volume processed by PayPal on the e-commerce giant’s global platform drops below 80 per cent.

PayPal will also have to pay eBay a referral fee for each new user it signs up through eBay.

The businesses will still share fraud, risk and customer service issue data after the split, but not data to be used for marketing purposes. PayPal will also continue to allocate time and money in its product roadmap for eBay specific projects.

Neither company, however, will be allowed to create a new business that directly competes with the other, unless PayPal is acquired by an eBay competitor. Were that to occur, eBay would have to give PayPal 15 to 21 months notice of the creation of a competing payments service.

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