Quote:
Originally Posted by savedfrommyspokes
My belief is that the reason ebay sold off paypal several years back had little to do with today's sales tax situation. It likely had more to do with ebay capitalizing on their "investment" in paypal.
Even today, paypal is not required to complete sales on ebay and payments (via CC) can be processed directly through eBay's software. I know, I have done it twice now in the past few months.
Based on the article, ebay is looking to become more involved (translates to making more money) on processing payments, as this will generate additional income for them(that PP is currently receiving). In other words, ebay is no longer using PP and switching to this new payments processing company because they will get more of a cut of each payment than they were from PP.
Likely, the changing of payment processors by ebay has nothing to do with this evolving sales tax situation.
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I never stated the sales tax situation was the sole reason they sold Paypal, but i still think it may have been one of the original reasons and a contributing factor. Think about it, if the main reason they are dumping Paypal now is because they can get a bigger slice of the fee for handling the transactions and/or to also control the information between buyers and sellers more than ever so they can't easily get in touch with each other, why didn't they just keep Paypal in the first place? They could have made whatever changes they wanted to the Paypal software, and since they owned it, they would get 100% of the revenue from handling the transactions. And you may also be correct in that another reason or contributing factor for the selling off of Paypal was to take advantage of their investment and cash out when they thought it was to their advantage. Seeing as how Paypal has continued to grow though, and how nominal Ebay's percentage of Paypal's business has shrunk to, if maximizing their investment return was the main original reason for selling Paypal in the first place, they're likely kicking themselves about it now with the way Paypal has continued to grow. It is up over 50% in the last year alone.
I'm sure there are other good reasons as well but, still believe Ebay disassociating themselves from the direct ownership of the payment handling/processing company was also being thought about in terms of how to keep them from appearing to be more directly responsible for sales and collections and possibly make them liable for tax and other reporting purposes. Sales tax and other tax compliance/responsibility issues is probably one of the reasons, not necessarily the sole or main reason, that Ebay divested themselves of Paypal several years back. I am aware that Paypal is not the sole payment option and that Ebay can process credit card payments and such but, with Payal being the main payment processor on Ebay, and Ebay not directly owning them, it helps in the appearance and fact that Ebay does not have complete control of the payments processing function, which helps them defend themselves should some taxing authority try to make a claim that they are directly responsible for all collections and payment processing themselves.
I agree with you that the fact that they are looking to now change payment processors for a bigger piece of the fee has got nothing to do with the sales tax issue. I was referring back to when they originally divested themselves of the ownership of Paypal. And now that Paypal is a separate company, they don't have to do what Ebay necessarily wants nor pay them what they think they deserve for their part of the business. Even with the known fact in the marketplace that Ebay is replacing Paypal in the near future, Paypal is still doing great on the stock market. So much for them needing Ebay!