If you've had your ear to the listening post over the past few months, you've heard parts of the Internet groaning about PayPal, the 16-year-old online payments company. Tech site The Verge recently called PayPal "terrible," citing several incidents of accounts suddenly being suspended allegedly without much warning. Fortune Magazine highlighted backlash against PayPal after parent company Ebay tweaked a transactions policy. And BankInnovation.com has reported that some twentysomethings “don’t trust PayPal with their money.”
PayPal will likely shrug off the negative press — and its split from Ebay, announced Tuesday, will only make doing so easier.
PayPal now boasts 153 million active digital wallets, up 15 percent from last year. In August, the company saw $203 billion in transactions, with revenue climbing 19 percent in the past 12 months, to $7.2 billion.
For any online retailer that wants to offer one-click payments, PayPal remains the only game in town, according to Wedbush Securities' Gil Luria.
"Visa spent tons of money on VdotMe [now known as Visa Checkout]," he told Fusion. "Google probably spent a billion or more on Google Checkout. Amazon spent many millions trying to get other retailers to use Amazon payments. (PayPal) has been competing with all these guys very successfully."
The reason for PayPal's success is its network effect, which exists because of its age — the very thing that some critics say is part of the problem. SNL financial's Seth Shafer says that for all the new entrants into the payments space, none has approached the dominance PayPal still enjoys.
That includes mobile payments, the fastest growing segment of the payments tech space. Last year PayPal bought Venmo owner Braintree, a company many saw as a potential PayPal competitor. And it just announced it was integrating Bitcoin payments into one of its products.
"A lot of these newer services have far fewer accounts," he said. "Until we see a startup go gangbusters and acquire a ton of accounts, I just don't see an established brand moving away from dealing with PayPal."
The Ebay announcement will allow both companies to settle into their natural states, PayPal as a growth company and Ebay as a mature, dividend-paying company. The two companies' 12-year marriage had been preventing that from happening, Luria said.
Ebay transactions represented just 29 percent of PayPal's raw volumes — a figure that could decline to as little as 15 percent within three years, according to Morningstar's R.J. Hottovy. In a note Tuesday, Hottovy said PayPal will now be worth slightly more than Ebay once it goes public thanks to stronger revenue growth, around 15 percent.
Finally, there's Apple, which recently announced it was updating its mobile operating system to expand the ability of users to make payments from their phones. Apple left PayPal and Braintree off its preferred payments provider list. But Shafer said that shouldn't mean much to PayPal, at least for now.
"I think omitting PayPal and/or Braintree is significant if they still aren't there six months from now," Shafer told Fusion in a follow-up email; "but at the moment I hesitate to read too much into it so soon after the unveiling of Apple Pay as often preferred partner lists evolve over time as more are brought on board."
And earlier this year, PayPal signed on with Samsung to handle mobile payments on Galaxy phones.
PayPal may be graying in Internet years, but it looks like it's going to hang around for awhile.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.