PayPal is one of the fastest-growing businesses for eBay (NASDAQ:EBAY) in terms of revenue and now accounts for around 27% of its overall value. PayPal’s total payment volume has been growing rapidly in the past couple of quarters, with a 28% year-on-year increase observed during the last quarter. We expect eBay’s payment business to eventually overtake its core e-commerce business in terms of revenue as growth in mobile payments and PayPal’s push into international markets drives further revenue growth.
Last week, eBay promoted David Marcus to President of its PayPal division after its previous head, Scott Thompson, left eBay to lead the ailing Yahoo. 
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David Marcus was the CEO of Zong, a mobile payments start-up, which was acquired by eBay and merged with its PayPal unit in 2011. With this move, eBay is trying to infuse some “startup energy” into PayPal, trying to capture a larger share of the mobile payments market in which PayPal competes with Google Wallet; ISIS, a mobile payment system backed by all major American carriers; and startups like Square.
The company recently launched PayPal Here, a mobile payment solution that enables small businesses to accept credit and debit card payments. eBay recently offloaded Rent.com, and signaled its intentions to focus on mobile payments and mobile commerce, which are expected to grow significantly in the coming years.
eBay’s renewed focus on PayPal under the new leadership could help the division roll out new products and services quickly and compete more effectively with Google (NASDAQ:GOOG), Square and other competitors.
We currently have a $42 Trefis price estimate for eBay, which stands nearly 10% above the current market price.Notes:
- EBay Names Marcus PayPal Head to Bring ‘Startup Energy’, Bloomberg [↩]