If you cover the e-commerce industry at all, you know that eBay is exploring its strategic options with PayPal. It's public knowledge that PayPal is experiencing significant, global growth - but at the same time, it's also enabling eBay competitor's with payment advantages. And, if eBay were to stop PayPal from working with its competition, eBay would be severely prohibiting PayPal's corporate growth.
eBay is stuck between a rock and a hard place.
So if, indeed, eBay divests PayPal, it's my speculation that First Data will gobble it up. The trend that points me in this direction is a fight for more e-commerce payment market share. Visa pulled out its big guns with its acquisition of Cybersource earlier this spring. The fact that Visa paid 40x Cybersource's EBIT shows how badly they wanted a foothold in this market.
And why not? E-commerce is 4-5% of total retail sales in the U.S. and quickly becoming a larger and larger portion. Processors that can get in now will have powerful winds of growth under their wings.
On top of this, Visa and First Data have always had a bit of a rivalry, and First Data wants a bigger share of e-commerce. So to me it makes sense. Why shouldn't First Data acquire one of the most dominant names in e-commerce?
So maybe we shouldn't be so surprised if the new name is: PayPal, a First Data company.
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