Daily Dose of iQ: At Icahn's Urging, eBay to Spin Off PayPal

Oct 01, 2014 — Allan Pulga

The big news in tech and retail yesterday: eBay is separating itself from PayPal. As a point-of-sale software provider, we have followed PayPal's activity closely over the years, as the company attempted to break through from online payments to in-store ones.

The NY Times reported (Sept. 30) that eBay announced it would spin off its PayPal payments unit into a separately publicliy traded company, following the nine-month-old advice of minority stakeholder Carl Icahn.

The split, which should complete by mid-2015, hopes to help PayPal better arm itself against the likes of Apple Pay and Square.

"The split is expected to complete by the middle of 2015, allowing PayPal and eBay to operate at 'arm's length' from each another [sic], and hopefully helping PayPal to expand its payment offerings to fight against the likes of Apple Pay and Square," wrote Engadget's Aaron Souppouris (Sept. 30).

Icahn insisted the move was a "no brainer," adding that the next step is for PayPal to help consolidate the payments industry through an acquisition or merger, if it wants to get ahead in payments, reported Business Insider (Sept. 30).

"In light of the development of strong competition such as the advent of Apple Pay, the sooner these consolidations take place, the better," said Icahn.

"Apple notably partnered with Stripe — not PayPal — to power Apple Pay," added Business Insider's Jillian D'Onfro.

PayPal has missed every window for U.S. payment innovation over the last decade... (The company) needs a different culture, leadership and approach.Keith Rabois, Former PayPal VP

Mashable quoted Keith Rabois (Sept. 30), a former PayPal exec, who previously told Bloomberg amid spinoff rumors in August: "There's a reason why PayPal has missed every window — the Stripes, the Squares —every level of innovation in the United States over the last decade Paypal has missed.

"And it's going to continue to miss as long as it's a subsidiary of eBay in San Jose. PayPal needs to have a different culture, a different leadership, a different approach."

Topics: Retail Operations, Wireless Trends, Mobile Industry, e-Commerce

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