PayPal, eBay to stay interdependent for five years after split

PayPal, eBay electronic payments division, said the two firms had agreed that eBay would not reduce the volume of transactions it channels through PayPal, while continuing to get better rates for its merchants for five years after the two split. PayPal is slated to be separated from eBay’s marketplace division in the second half of this year, creating a publicly traded company, which some analysts say will be worth $40 billion. EBay has agreed to ensure it will channel 80 percent of its online gross merchandise sales via PayPal, as it does now, for the next five years, PayPal said in a regulatory filing. The two companies also agreed to pay each other a commission if the percentage of marketplace sales rose or fell above that mark. PayPal, for its part, said it agreed to continue charging eBay merchants less than it does other merchants, which would mean that “PayPal rates for eBay merchants will remain largely consistent with today’s pricing relationship”. The terms of the agreement also prohibit eBay from forming its own payment service and PayPal from starting its own marketplace. Reuters