In Pictures: How PayPal Outgrew eBay

October 2, 2014 11:01 PM

A logo sits on the PayPal company stand, a unit of Ebay Inc., during the Apps World Multi-Platform Developer Show in London, U.K., on Wednesday, Oct. 23, 2013. Retail sales of Internet-connected wearable devices, including watches and eyeglasses, will reach $19 billion by 2018, compared with $1.4 billion this year, Juniper Research said in an Oct. 15 report. Photographer: Chris Ratcliffe/Bloomberg

Chris Ratcliffe/Bloomberg

EBay and PayPal were once rivals, but in 2002 they joined to become a single company. Since then, PayPal has worked to move beyond the confines of its parent's online auction site. It is now well prepared for its planned spinoff. (Image: Bloomberg News)

In the Beginning: X.com

PayPal has its roots as an Internet bank called X.com. This business model was short-lived, and in 2000 the company shifted gears to focus on handling payments for eBay, where it was already listed as the preferred payment provider for 50% of auctions. (Image: Shutterstock)

Dollar handshake

NicolÃÂ¡s MeroÃÂ±o/Getty Images/iStockphoto

Joining Forces

EBay had its own online payment system called Billpoint, which it developed with Wells Fargo. But auction sellers preferred the PayPal system, and eBay eventually conceded, agreeing to buy PayPal in 2002 for $1.5 billion. (Image: Thinkstock)

Peter Thiel, co-founder of PayPal Inc., speaks during a Bloomberg Studio 1.0 Interview in San Francisco, California, U.S., on Monday, Aug. 25, 2014. EBay Inc.'s PayPal service will start accepting bitcoins, opening up the worlds second-biggest Internet payment network to virtual currency transactions. Photographer: David Paul Morris/Bloomberg *** Local Caption *** Peter Thiel

David Paul Morris/Bloomberg

Fixer Upper

EBay's first decision after buying PayPal was to shutter the payment startup's online gambling business, forgoing the significant revenue this operation brought in. "It is very clear to us that by working together, PayPal and eBay can help the other expand," PayPal's then-CEO Peter Thiel (pictured) said at the time. (Image: Bloomberg News)

Igor

PayPal's early success hinged on its approach to risk management. One paricular fraudster, named "Igor," regularly challenged PayPal in its early days. In honor of this foe, PayPal named its transaction-monitoring program "Igor" and has used similar names for later anti-fraud technology. (Image: Thinkstock)

Shoppers look at products at the Upper West Side Apple Inc. store in New York, U.S., on Sunday, July 20, 2014. Apple Inc. is expected to release earnings data on July 22. Photographer: Michael Nagle/Bloomberg

Michael Nagle/Bloomberg

Going Big

By 2004, PayPal was eager to serve the kinds of merchants that didn't need eBay. It started pursuing the business of large e-commerce sellers such as Apple, Hotwire and Dell. In later years it would add more big merchants, including Hewlett-Packard, Barnes & Noble and 1-800-Flowers.com. (Image: Bloomberg News)

Square, a credit card reader made for smartphones, is arranged for a photograph in New York, U.S., on Monday, Oct. 25, 2010. Square Inc.'s mobile-payment technology allows smartphone users to make credit card payments and the availability of funding for new ventures. Photographer: Jin Lee/Bloomberg

Jin Lee/Bloomberg

New Rivals

A new generation of competitors quickly emerged for PayPal. Among these was Bill Me Later which PayPal eventually bought and Square (pictured), which prompted PayPal to start offering its own PayPal Here mobile card reader. (Image: Bloomberg News)

Presidential Personalities

PayPal's presidents have come from many backgrounds. Its last leader, David Marcus, worked to bring a startup culture to the eBay unit. The newest president, Dan Schulman (pictured), has a background at bigger companies such as American Express.

A Discover Financial Services credit card is arranged for a photograph in New York, U.S., on Thursday, June 23, 2011. Discover Financial Services reported a second-quarter profit of $1.09 a share, on a tax benefit. Photographer: Scott Eells/Bloomberg

Scott Eells/Bloomberg

Discovering New Territory

PayPal, now a staple on the checkout pages of larger merchants, wants to be a common payment method at the physical point of sale. Though it established several one-on-one deals with major retailers, it needed a pact with Discover to reach a bigger scale. (Image: Bloomberg News)

The Ebay Inc. Venmo application (app) is arranged for a photograph on an Apple Inc. iPhone 5s in Washington, D.C., U.S., on Friday, Aug. 22, 2014. After downloading the Venmo mobile-payment app onto a smartphone, users can connect them to bank and credit-card accounts, and then link up with friends to send and receive money on-the-go. Venmo, based in New York, alone handled $314 million in mobile payments in the first quarter of this year, up 62 percent from the prior quarter. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

Braintree and Venmo

One of PayPal's most significant acquisitions in recent years was its $800 million purchase of Braintree, which had been winning the business of developers at prominent startups. Braintree also owns Venmo, a popular provider of mobile commerce and P2P payments. (Image: Bloomberg News)

Signage for Ebay Inc.'s PayPal unit is seen outside the company's offices in Dubin, Ireland, on Thursday, Feb. 9, 2012. Ireland will give a tax break to ''key'' overseas workers who are assigned to work in the country, Finance Minister Michael Noonan said in an e-mailed statement. Photograph: Aidan Crawley/Bloomberg

Aidan Crawley/Bloomberg

'New' PayPal

In 2015, if all goes according to plan, PayPal will have just an "arm's length" relationship with eBay. PayPal's independence will make it a more palatable partner for the other giants of e-commerce. (Image: Bloomberg News)