PayPal and eBay Start Downsizing

eBay and PayPal have begun laying off employees, notifying those being laid off, as reported by Re/code. Both the companies are looking to scale down as they are poised to split in the latter half of this year. Some of the PayPal employees who were let go held roles related to sales and product development. These employees belonged to divisions which focus on aiding restaurants and small business retail stores accept PayPal as a payment method.

Update (breaking news) - Don Kingsborough, a senior PayPal executive who was responsible for the online payment giant’s move into the physical retail world, has left the company. He worked on bringing Paypal to in-store, in-person payments. The timing of mass layoffs and his exit is merely coincidental he said.

PayPal faced disappointment from its in-store initiatives which involved mobile payments and PayPal Here, a credit card reader. PayPal has also not launched its in-store beacon product and has only shipped the product to a few businesses as part of a test pilot. It seems that PayPal wants to focus more on its online and in-app payments systems. PayPal’s newer business units, which include Braintree and Venmo, have not been affected by the layoffs.

eBay had already cited plans to lay off 7% of its global workforce which is expected to affect 2400 positions across multiple divisions of the company. eBay intends to complete this cost reduction before the planned spinoff of PayPal. For its Enterprise Unit, eBay is looking at options which involve either a sale or an IPO. The Enterprise Unit provides both online and brick & mortar retailers with software tools, warehousing and logistics services.

The spinoff of PayPal from eBay is aimed at focusing on the competition in the payment processing space. PayPal will look to catch up with the new popular forms of payments like Apple Pay. eBay is likely to develop its own payment technology post the spinoff. eBay recently hired a top executive, from Apple’s ecommerce and payments division, for the role of Chief Product Officer. eBay will plan on developing in-house payments capabilities.

It is expected that eBay will still maintain a partnership with PayPal post spinoff. With high focus on their respective core functions post the spinoff, the two emerging entities are expected to become leaner and more efficient.