eBay drops marketplace fees as it pins hopes on PayPal

PayPal pushed into the limelight

12 March 2009 11:17 GMT / By Verity Burns

eBay is pinning its hopes on PayPal saving it from ruin, the company announced on Thursday.

"We expect PayPal to become the next leading online global payments network", John Donahoe, CEO and president of eBay said in a statement.

The news comes as the company released plans to attempt to boost its core auction business with the introduction of no insertion fees for 99p-start auctions on eBay Marketplace.

However it's not all good news, eBay now says you'll have to pay a whopping 10% final value fee on your item up to £40, but you won't pay a thing if your item doesn't sell.

At the same time, eBay is to push towards more fixed price sales and diversify across a range of formats including classifieds and advertising. These areas are expected to grow faster than ecommerce and will help eBay connect buyers and sellers locally, nationally and globally.

"We are aggressively remaking and transforming our eBay Marketplace and diversifying the ways in which we compete in ecommerce", Donahoe added.

The company has said it expects its total company revenues to reach between $10-12 billion in 2011, up from $8.5 billion in 2008, led by strong PayPal growth, Skype and other ecommerce formats.

Bullish forecasts show that the company is hoping PayPal itself is expected to increase significantly from 2.4 billion to between $4-5 billion, while eBay Marketplaces is expected to achieve revenues of $5-7 billion.

Skype also hopes to more than double its revenue to $1 billion by 2011.