Could a merger follow the PayPal-eBay split?


By Mae Anderson, AP

NEW YORK –PayPal’s split from long-time partner eBay Inc. makes Carl Icahn mighty happy. But he doesn’t think PayPal should stay single for long.

Icahn, who months ago called on eBay to spin off the lucrative online and mobile payment service, continues to believe that the payments field must be consolidated, either by PayPal buying up smaller rivals or by merging with another major player.

“In light of the development of strong competition such as the advent of Apple Pay, the sooner these consolidations take place, the better,” he wrote on his website Tuesday in the wake of eBay’s announcement that it will split off PayPal by the second half of 2015.

An independent PayPal will be much more appealing to potential customers like Amazon.com who compete with eBay. And PayPal will have more freedom to aggressively take on new mobile pay challenger Apple Pay.

PayPal services US$1 of every US$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. The service posted 20 percent revenue growth in the last quarter to US$1.95 billion — representing nearly half of eBay’s total revenue. And it’s on track to process 1 billion mobile payments this year. The company’s PayPal Here and One Touch mobile payment service, which it acquired with the purchase of Braintree, compete with players such as Square and Google Wallet.