If you want to bid on eBay (Nasdaq: EBAY) bargains next summer, you may want a quick click finger, a good read on the seller you'll be buying from, and a PayPal account.
Come July, eBay will no longer support third-party checkout solutions. Hit the road, Google (Nasdaq: GOOG) Checkout and whatever American Express (NYSE: AXP), Visa (NYSE: V), or MasterCard (NYSE: MA) may have up their sleeves in this growing niche. If Latin America's MercadoLibre (Nasdaq: MELI) ever wants to make a stateside splash with its MercadoPago platform, it will have to forgo a nudge from minority investor eBay.
Is eBay being greedy, brilliant, or both? Yes, yes, and oh yeah.
The online giant claims that the move will help provide speed and consistency to the checkout process. It will also make it easier to support mobile platforms. eBay points out that less than 10% of eBay.com transactions are being processed through third-party options, so it may even make sense to move everyone over to the PayPal mother ship.
Unfortunately, this is also the kind of move that will make eBay bashers -- and they're out there, just check the comment box below in a few days -- even angrier at the online marketplace. It doesn't matter that PayPal rocks. Despite bellyaching over transaction fees, PayPal has been growing a lot faster than eBay's marketplace business in recent years. Payment volume grows briskly, and PayPal tacks on a million new accounts every passing month.
It may have been a product of eBay's success early on -- when PayPal thrived against the Billpoint option that eBay launched in cahoots with Wells Fargo (NYSE: WFC) -- but it has been running on its own for years. PayPal doesn't need exclusivity on eBay to matter. It has been growing its merchant services business at a better than 40% year-over-year clip in each of the past three quarters. If eBay.com should ever succumb to free online classifieds, social networking apps, or cheaper niche auction platforms, PayPal will surely live on.
Still, officially removing support for third-party solutions will make it that much easier for PayPal to continue to dominate this space.
Well played, eBay. Let's hope that the Web-savvy consumer doesn't bite back.
Is eBay right to nix support for third-party checkout solutions? Share your thoughts in the comment box below.
