UPDATED 12:32 EST / JANUARY 12 2012

Will eBay and PayPal Split as Mobile Commerce Peaks?

The last holiday shopping extravaganza showed everyone a glimpse of the future: that of mobile commerce. Aside from having the most sellable line-up from smartphones to tablets, mobility has transcended to the next level of the game, giving birth to new markets: advertising, shopping and cashless payments. These offspring are set to take new heights in 2012, with a big pound on mobile payments being the newest and relatively unexplored consequence. The big players of mobile commerce have cashed in billions in 2011 and are looking to spiking revenues this year.

Mobile Commerce Volume Forecasts

Mobile commerce has celebrated several wins, thanks to mobile shopping and payments. For eBay, the fourth quarter of 2011 has registered their biggest revenue jump in five years. For the whole year, they handled a whopping $4 billion in mobile payments, which surpassed the organization’s prediction of just $3.5 billion.

This year, eBay predicts to cage in $8 billion in mobile commerce volume, while PayPal is slated at $7 billion. There is an obvious amount pressure on the auction mogul to perform well in 2012, following phenomenal revenue for the previous year.

Mobile Shopping To Slaughter Online Shopping in 2012

Mobile visitors are most likely to purchase a product compared to those who are using their desktops to browse through shopping websites, a Fab.com study reveals. The results also depicted 30% traffic growth since the launched of their mobile app in October.

Fab.com’s CEO, Jason Goldberg discussed the magnitude of mobility into pushing their startup company forward:

“We are investing a lot of resources into mobile and a big eye opener for me is seeing how big the growth has been in mobile usage. The mobile business is over-indexing compared to the web for purchases. That’s across all mobile. And the iPad itself has a significantly higher order value.”

eBay-PayPal Split Nearing?

For as long as I can remember, the eBay-PayPal tandem has been quite successful in promoting an integrated online shop that mimics the real world scenario of a store wherein you purchase goods and pay to checkout.

BGC Partners LP Analyst Collin Gillis explained why this set-up is a hit to consumers:

 “You don’t want to have different accounts, different processes — you want to link these things together as much as possible. It also gives you that end-to-end data on the entire transaction. If you’re a merchant you have to take PayPal.”

Now the rumors pertaining to a separation does not sound appealing to patrons, but it sure is to boost eBay’s valuation and is poised to gain 30% without PayPal, according to a Bloomberg report.

Another analyst from Morgan Keegan, Justin Patterson, shared his insights on the reported split and how this will drive growth for eBay:

“The growth is in PayPal. It’s not getting as much credit. There is an inherent conglomerate discount that investors put on it, that is not necessarily in sell-side analysts’ price targets. Spinning out PayPal is one way to get that valuation more quickly.”

He then stressed, “That’s a way of monetizing it for shareholders because it’s clear the market isn’t giving them that.”

Another point that flames the issue is the direction that eBay is looking to traverse—a merchant-based commerce that is parallel with Amazon’s model. This scenario will possibly jeopardize PayPal’s business since eBay marketplaces do not have the short-term financing schemes that the former requires. A break-up would also mean the auction giant will be able to easily loan money to propel expansion.

Humankind has embraced mobility as another dimension of life. It has changed how the world communicates. I could not imagine a hectic professional avenue without smartphones or tablets. These gadgets are a typical sight in every corner of the globe. This idea fuels the industry builders to pound on innovation that would make it more difficult for a being to survive devoid of mobile devices.  Mobile commerce is a great example of an innovation that is now chasing billions in revenue.

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