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PayPal CEO shoots down concerns over eBay-Adyen partnership

The announcement that eBay Inc. has chosen Netherlands-based Adyen BV as its primary partner for processing payments eclipsed the extension of eBay's partnership with PayPal Holdings Inc.

PayPal separated from eBay in July 2015 but eBay's online marketplace still uses PayPal for processing payments, with the operating agreement set to expire in 2020. The two companies have been renegotiating the operating agreement, but eBay President and CEO Devin Wenig said during the company's earnings call that it "has not been extended and it will not be extended."

Instead, PayPal and eBay extended their partnership through July 2023 under a new commercial agreement. Wenig said the partnership will see PayPal included as a payment option under eBay's intermediated payment model, adding that Adyen will now be eBay's primary partner.

The partnership between eBay and Adyen has raised concerns about how it would impact PayPal in the long run. But PayPal President and CEO Daniel Schulman offered assurances that the company will handle any changes that may come with eBay's decision to play a direct role in managing payments on its platform.

"Our 2018 and our medium-term guidance already include the anticipated economic impact of the eBay transition, which is quite manageable over a multiyear period," Schulman said during PayPal's earnings call.

In setting its guidance, PayPal has always taken into consideration eBay's transition, Schulman said. As such, the company's medium-term guidance and long-term outlook will not change following the announcement that Adyen will become eBay's primary partner, he added.

"[eBay's transition] opens up a very large and very real opportunities for us to work with the largest next-generation marketplaces post the [operating agreement]," Schulman said.

Under the operating agreement between eBay and PayPal, eBay can now experiment with merchant-of-record capabilities. But eBay has not yet decided to become a merchant of record.

"There are many ways that we can become a payment intermediary. [Merchant of record] is one of them," Wenig said. "That's a decision yet to be made, and it may actually change depending on the geography in which we operate in."