When eBay decided to take over payment-processing from PayPal, the latter made the best of the rejection by claiming it would become free to expand its payment services on other platforms. On Monday, PayPal was vindicated with the news that Amazon will accept Venmo and will add it to Amazon Checkout next year.
PayPal CEO Dan Schulman called it the beginning of an exiting journey with Amazon now that PayPal is no longer constrained by the contractual obligations of its operating agreements with eBay.
After Carl Icahn forced eBay to break up with PayPal in 2015, eBay put in place a plan to launch its own payment service known as Managed Payments. The operating agreements between the two companies placed restrictions that have been expiring, giving PayPal the freedom to work with other online marketplaces.
In an earnings call with Wall Street analysts after announcing third-quarter earnings yesterday, Schulman said PayPal customers in the US will be able to make purchases on Amazon.com and on the Amazon mobile app using their Venmo accounts and said it would help PayPal monetize the Venmo service.
The PayPal CEO also noted that customers can now checkout with PayPal on Walmart and GoFundMe.
As PayPal’s announcement makes clear, this only impacts PayPal’s Venmo service. But clearly the idea that Amazon might eventually add PayPal to checkout has many people excited.
The bottom line for sellers, however, is that just like eBay, Amazon won’t allow sellers to collect funds from buyers directly. When they had been allowed to on eBay, it offered a synergistic component – if you sold something on eBay, you had funds in your PayPal account to make purchases on eBay. On the other hand, when marketplaces offer buyers more choices in how they may fund their purchases, that’s a win for sellers.