eBay might need PayPal more than it thought

A new study commissioned by PayPal suggests a lopsided level of dependence between the two companies.

eBay shares took a hit on Wall Street Friday after PayPal suggested in its financial report that its former parent company may experience a slowdown in merchandise sales volume from abandoned checkouts.

eBay announced earlier this year that it's winding down its partnership with PayPal as part of a move to bring its payments intermediary service in-house. Dutch fintech company Adyen is set to become its primary payments processor, a title PayPal held for the past 15 years.

PayPal has said from the beginning that uncoupling with eBay was a positive. CEO Dan Schulman noted that it would give PayPal more freedom to partner with other online marketplaces where its small business customers were selling. Likewise, eBay projected that the move would add $500 million to its operating profit after the PayPal deals expired.

Nonetheless, the market reacted on the day of the announcement and PayPal saw shares sink more than 8 percent, while eBay enjoyed its biggest one-day gain since 1998, the year of its market debut. Now, it turns out eBay may need PayPal way more than the other way around.

A new study commissioned by PayPal suggests a lopsided level of dependence between the two companies.

"The consumers that we have, the sellers that eBay and PayPal share demand to have PayPal," Schulman said on the call with analysts Thursday. "Consumers on average are 54 percent more willing to buy when a merchant accepts PayPal [on eBay]. That goes up when it's a cross-border transaction, when it's mobile, when it's unfamiliar brands."

"And so you also have 59 percent of PayPal users who have abandoned a transaction because PayPal wasn't a checkout option," Schulman continued. "And so we've got 254 million customers on our platform right now. Imagine if almost 60 percent of them would abandon a sale because PayPal Checkout wasn't available."

Shulman also said some eBay sellers that have moved over to intermediated payments are reporting that their sales have dropped 40 to 60 percent.

eBay responded to complaints on its seller forum, telling sellers experiencing a drop in sales that they can revert back to PayPal in the near term. In long term, eBay is working to have PayPal on intermediated payments beginning next year.

As of Friday afternoon, PayPal shares were up more than eight percent and eBay's were down nearly 10.

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