You know that old saying, about there being no second acts in American Life? Don’t tell that toPayPal, whose eBay parent announced today that it’s spinning off the payments company by mid 2015.
PayPal’s new independence is at least the third act for PayPal, which was founded by tech luminaries Elon Musk, Max Levchin, and Peter Thiel in the late 1990s. PayPal first rose to prominence as the defacto standard to pay for things on the Web before secure, online credit card transactions were widespread. It was then acquired by online marketplace eBay in 2002, for whose merchants it has served as a primary financing mechanism for sales.
In freeing itself from eBay, PayPal will have the mobility it needs to face competitive challenges from the likes of Apple Pay and Alipay, the payments subsidiary of the newly public Alibaba. But it may also be able to get back to its entrepreneurial roots, and develop new lines of business not specifically tied to its former parent.
“PayPal has fallen flat in mobile [payments] and perhaps now they can focus on a competitive strategy to capture a larger part of the mobile payments market,” says Nathalie Reinelt, an analyst with Aite Group.
In recent years, PayPal has tried to tackle a growing consumer and business demand for payment options by allying itself with companies such as Home Depot, which allow customers to pay at the cash register using their PayPal accounts. PayPal has also ventured of late into business finance through its working capital loans. Via INC