Ebay’s PayPal spinoff could make it a major mobile payment player

EBay Inc. is splitting off its PayPal division, throwing the business into direct competition with Apple Inc. and Google Inc. as consumers step up the use of smartphones and computers to pay for goods and services. An independent PayPal, which could fetch about $47 billion based on rivals’ valuations, would have more latitude to forge alliances with retailers and other financial firms as Google and Apple seek to turn their products into tools for digital payments. In addition to PayPal, eBay’s marketplace business could also become an attractive takeover target.

If done right, this transaction could springboard both entities into more competitive players in their respective industries.

R.J. Hottovy, an analyst at Morningstar Inc.

The competitive landscape has also changed dramatically since eBay bought PayPal. Like much of the computing industry, the business of online payments is increasingly moving to mobile devices, where PayPal isn’t as dominant. Apple this month announced Apple Pay, a way for people to use an iPhone to pay for goods in stores. Mobile payments in the U.S. are projected to total $118 billion by 2018, up from $3.5 billion this year, according to eMarketer Inc.

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