PayPal on Thursday laid out plans for its future as an independent company at an event in San Francisco it called the Commerce Rewired Event. The San Jose-Calif.-based payments company is set to be spun off of eBay some time during the third quarter and plans to trade its shares on the Nasdaq under the ticker PYPL, which it had used when it first went public in 2002.
At the event, PayPal announced a new partnership with Bigcommerce, an e-commerce platform for retailers, as well as the fact that it will be linking One Touch -- its service to keep a user logged in on apps and sites for payments --across mobile devices and the Web. The latter development fits right in with the company's focus on mobile innovation.
"You're going to see a fundamental change over next three, five, 10 years, more of it to mobile and point-of-sale checkout," Dan Schulman, PayPal's president and future CEO, said at the event. "I'm not going to be the next person to talk about the demise of cash and be wrong, [but] you are beginning to see the digitization of money. PayPal is well positioned to be a leader in that transition."
During the event, Schulman shared some figures to show how the company is a leader in the payments space and specifically in mobile. PayPal accomplished a billion transactions in the first quarter of 2015, a third of which were mobile. Schulman also said that 1 out of every 3 U.S. adults uses PayPal and that the company processes 4 billion transactions last year, showing 25% growth year over year, driven largely by mobile.
PayPal did not disclose, however, how many mobile users it has, only mentioning the 165 million customers it serves around the world.
Bill Ready, senior vice president of global merchant and next generation commerce and a former head of Braintree, which was acquired by PayPal, bolstered Schulman's message: "Over the coming three to five years we believe the commerce experience is going to be completely rewired. We believe we are well on our way to that. This is really driven largely by mobile."
Ready highlighted his company's recent acquisition of mobile-payments startup Paydiant as one of the ways in which it will be attacking this mobile revolution.
While the PayPal executives were nothing but optimistic about the company's future, PayPal has been under some fire recently.
It was recently forced to pay $25 million in fines for signing up consumers to its credit program Bill Me Later without consumers realizing. Additionally, The Wall Street Journal recently chronicled some smaller merchants' struggles with PayPal taking too heavy of a hand with the merchants' revenue.
Lastly, the payments space in general is heating up, with Apple's (AAPL) Apple Pay, Square and others stepping into PayPal's realm. PayPal supports Apple Pay and other payment options, aiming to be "payment agnostic," but that hasn't stopped others from questioning PayPal's standing in light of fierce competition. Piper Jaffray analyst Gene Munster recently went so far as to downgrade eBay due to the competition PayPal is facing.
Nonetheless, PayPal is still posting some good numbers, having largely propped up eBay's most recent quarterly earnings, with PayPal's revenue surpassing that of eBay's marketplaces' for the first time. PayPal brought in $2.11 billion in revenue, compared with $2.06 billion for marketplaces.
Since joining eBay nearly a decade ago, PayPal has handled more than 18 billion transactions and more than $1 trillion dollars in payments, while serving 165 million consumers in 200 countries. It may become more agile and better able to innovate as a standalone company.
"As PayPal spins off from eBay it will become a more nimble company that ideally can adapt to changes in the market with increased speed," 451 Research analyst Jordan McKee said. "This will serve it well as the pace of innovation accelerates around it."
Once it is no longer tied to eBay, PayPal will likely have an easier time forming partnerships with other companies such as Amazon (AMZN) that may have seen PayPal under eBay's oversight as more of a competitor.
"As a component of an organization, it probably doesn't reach its full valuation," Needham analyst Kerry Rice said. "Independence allows them to be more flexible with partnering."
While independence from eBay can certainly help, PayPal will still need to innovate, especially with in-store capabilities, if it wants to remain relevant amid the rising competition in payments.