EBay Inc. has more bad news for long-time payments partner PayPal Holdings Inc.
The online marketplace announced new partnerships with PayPal competitors Apple Inc. and Square Inc. EBay will begin accepting Apple Pay in the fall and, through a new deal with Square, offer merchant loans of up to $100,000. The new alliances follow EBay’s February announcement to gradually shift its payments processing business from PayPal to Adyen.
The news shows how PayPal’s split from EBay in 2015 continues to shake up the payments business. Apple Pay, which will be available on a limited basis on EBay beginning in the fall, gains access to a global marketplace where shoppers spent $88.4 billion last year. Square gets visibility into the financial risk of millions of small EBay merchants, providing valuable leads on potential loan customers. Loans, issued by Salt Lake City-based Celtic Bank, will be offered to EBay merchants beginning in September.
PayPal will continue to be a payment option on EBay at least until July 2023. The companies have been slowly unwinding from each other according to the terms of a separation agreement. EBay remains a significant source of business for PayPal. PayPal says any loss of EBay business is offset by growth in helping small businesses sell on other marketplaces and their own sites. That businesses totaled $65 billion in yearly payments volume, which was growing at more than 40 percent per year, compared to EBay’s single-digit sales growth, PayPal told investors in April.
EBay gives Apple Pay a credibility jolt in the digital wallet space that online shoppers have been slow to embrace since using credit cards online and in stores isn’t that difficult. EBay could shore up some sales for loyal iPhone users who occasionally back out of purchases when Apple Pay isn’t accepted. Apple gets a small fee from transactions made on the platform.
EBay marks a big opportunity for Square to extend its merchant loans to EBay’s millions of sellers. Square Capital, the lending business, plays an increasing role in boosting the company’s sales and profits since it began in 2014. In the first quarter of 2018, 50,000 business loans through Square Capital totaled $339 million, up 35 percent from a year earlier. Most of the merchants taking loans from Square are stores and restaurants that need money to open a new location, buy inventory or fund day-to-day operations.
In 2016 Square started extending credit to businesses that operate outside of its own payments processing system, like restaurant technology startup Upserve. Partnerships with large platforms like EBay will help Square compete with companies like PayPal and Amazon.com Inc., which also offer merchant loans.
