Here’s How PayPal Is Extending eBay’s Reach

By Roger Baettig | January 14 2013 2:08 PM

REUTERS

A photograph of a computer screen showing the website eBay is shown here in Encinitas, California April 22, 2009.

Sponsorship Link

Though the likes of eBay and eBay’s (NASDAQ:EBAY) PayPal were key in the paradigm shift from shopping in brick-and-mortar stores to online shopping, recent developments between PayPal and retailers have shown that the company doesn’t disregard traditional shopping.

While at first PayPal may have been a simple tool for online transactions between complete strangers, now it is functioning more along the lines of a bank, with stored money, withdrawals, and deposits. PayPal has even been bridging the gap between online and offline, with a new system that allows in-store payment from PayPal accounts to participating retailers in a way very similar to debit cards.

Though the new system is not yet widespread, it is growing. After PayPal announced Monday that seven more retailers are using the payment technology, the number of participating retailers has reached twenty-three, with about 18,000 brick-and-mortar stores throughout the U.S. now accepting PayPal payments. The store variety ranges from Foot Locker (NYSE:FL) and Abercrombie & Fitch (NYSE:ANF), to Guitar Center, to Toy “R” Us, to Spartan Stores (NASDAQ:SPTN) and Dollar General (NYSE:DG), and PayPal’s Don Kinsborough says it has even expanded to include gas stations.

As the technology doesn’t require a significant investment from retailers, it could easily expand to more and more retailers as it gains popularity, and those retailers would face less risk adopting it. In turn, PayPal would be able to continue expanding its influence in the shopping realm, which could mean a boost for eBay’s shares.

In 2011, eBay’s shares stayed mostly between $30 and $35 a share, but as PayPal was rolling out the in-store payment technology, eBay’s shares rose steadily through 2012 from $30 to over $53 per share. Although eBay’s shares were down Monday morning from the previous close, the trend for the shares has been positive, and could prove to continue upward as eBay spreads its influence through PayPal.