2026-07-06 19:34:35 What’s PayPal’s first solo move? – NEW WTOP Skip to main content

What’s PayPal’s first solo move?

By WTOP Staff

MAE ANDERSON
AP Business Writer

NEW YORK (AP) — PayPal’s impending split from long-time partner eBay Inc. will ratchet up its appeal to online retail competitors such as Amazon.com and give it the freedom to aggressively take on new mobile pay challenger Apple Pay. For eBay, the challenge will be how to drive revenue without its fastest-growing division.

The move marks a 180-degree turn for eBay Inc. CEO John Donahoe, who had been adamant in spurning activist investor Carl Icahn’s call months ago to spin off PayPal. Donahoe, who will step down after the split is finalized in the second half of next year, said he now agrees that it’s the right path for both companies. With the launch of Apple Pay next month expected to reshape the mobile payments industry, Icahn said he’s “happy” eBay came around, “perhaps a little later than they should have, but earlier than we expected.”

Investors were happy too, sending eBay shares up more than 7 percent to close at $56.63 on Tuesday.

PayPal services $1 of every $6 dollars spent online. It collects fees from over 150 million users who use the online service to send money to other users and pay for goods and services in more than 200 markets. Acquired by eBay in 2002 for $1.3 billion, its partnership with the popular site helped expand PayPal’s reach worldwide. The service posted 20 percent revenue growth in the last quarter to $1.95 billion — representing nearly half of eBay’s total revenue.

PayPal also has staked a claim in the small but swiftly-growing mobile payment arena, and is on track to process 1 billion mobile payments this year. It launched PayPal Here and acquired Braintree and its One Touch mobile payment service, which compete with players such as Square and Google Wallet. The payoff is huge for whichever player can own the space: mobile payments could spike to $58.4 billion by 2017 from just $1 billion last year, Citi Investment Research analyst Mark May said in August. And the pressure is on. Apple Inc., which has 800 million user accounts through iTunes, threw down a gauntlet last month with the announcement of its own digital wallet Apple Pay, slated to launch in October.

So what might be PayPal’s first solo move?

Courting major eBay competitors such as Amazon.com Inc. and newly public Alibaba, who might be more likely to partner with PayPal now that it’s not married to a direct competitor, says Cantor Fitzgerald analyst Youssef Squali. The company also could be a takeover target. Squali notes that Google and Microsoft (not to mention Visa and Mastercard), have tried to build online payment platforms with varying degrees of success.

And with PayPal “now essentially free to focus on payment innovation, and standing on the shoulders of a well-capitalized eBay, they can act more aggressively to counter new competitors,” says R.W. Baird analyst Colin Sebastian. He notes that PayPal will end up with a sizable amount of cash and none of eBay’s debt.

In a statement, Icahn asserted that PayPal either needs to buy other digital payment services or consider selling itself to another “strong player” to prepare for an industry shakeout that he believes will happen soon. “In light of the development of strong competition such as the advent of Apple Pay, the sooner these consolidations take place, the better,” Icahn said.

New CEO Dan Schulman will bring both mobile and prepaid payment experience to the company. Schulman, 56, was founding CEO of Virgin Mobile, before leading the prepaid group at Sprint Nextel and most recently expanding mobile and online pay services at American Express. Citi’s May noted that few people have that background in financial services, mobile technology and payments — three key strengths to be competitive going forward in digital payments.

The benefits of the move for eBay are less clear. The San Jose, California, company was plagued this year with a data breach and an algorithm change at Google that led to fewer hits from the search engine. In its most recent quarter, core marketplaces revenue rose just 9 percent to $2.17 billion, versus a 20 percent jump in payments revenue.

Devin Wenig, currently president of eBay Marketplaces, will become CEO of the new eBay Inc., leading both the marketplaces and enterprise divisions.

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AP Business Writers Michelle Chapman and Joseph Pisani in New York contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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