eBay Making PayPal More of a Financial Powerhouse

eBay (EBAY) is in the news twice this morning.  First off, Business Week is citing that the online auctioneer’s PayPal unit is becoming more and more like a bank and noted that it even has a banking charter in the European Union.  The company has already been into debit cards and has had credit pacts for some time.

Then this morning there is word that General Electric (GE) is partnering with eBay to offer an eBay brand of MasterCard in late June.  The fact is that the GE and payPal have already been partners for some time.  This card will at least have the same "1.00 equals 1 point" reward program for purchases that are onlin and offline.

eBay is going to do the promotion of the card and GE Money Bank will issue the card and provide customers service, billing and credit management.  Some may think this is a silly move, but the truth is that this will actually expand upon the business model.  eBay will merely need to send out emails to its millions and millions of customers, and they’ll get a cut of the finacial fees on top of the potential increased ability for more auction bids.  At this point for an ebay, it’s all about incremental growth and getting more and more out of your existing base while simultaneously looking for more avenues to grow.

Jon C. Ogg
June 15, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.