A year after eBay announced that it was dropping PayPal as a form of payment on its website, the payment processing giant has come out with a big investment to strengthen its partnership with Uber.
According to PayPal’s president and CEO, Dan Schulman, the company has decided to expand on its partnership with Uber for “future payment collaborations” and “Uber’s digital wallet”.
Schulman mentioned that the $500 million investment is going to be used for a private placement. With that being said, he remained tight-lipped on what the investment’s terms entailed.
Uber’s IPO is Just Down the Line
But even as Schulman and the execs from Uber remain secretive about the investment, it is projected that the private placement will give a big kickstart to Uber’s upcoming IPO.
The Uber IPO would reportedly be valued between $80 billion to $100 billion. Debuting next week on the New York Stock Exchange, the IPO is said to be one of the biggest liquidity events for any tech-based company within the U.S.
What do the post-IPO and the larger plans look like for Uber and PayPal?
Uber’s Digital Wallet
According to TechCrunch, one of the objectives may come in terms of progressing Uber’s digital wallet. This has been described in Schulman’s statement as well.
Uber’s rendition of a digital wallet by the name of Uber Cash currently lets the company accept payments directly without having to pay transaction costs to third-party processors such as PayPal. If it gets the infrastructural support that it needs from PayPal, then it could develop these digital wallet services along with its Uber Visa card into something that works on other merchants as well.
Increasing Reach into International Markets
Another objective would be for PayPal to increase its transactions through Uber. It already holds the title of the largest payment partner for Uber in the U.S. and Australia.
With this partnership, it may be given the same role in other territories as well, where its rival services are a big part of the Uber infrastructure.
PayPal and Recent Investments
Whatever the longer plans may be, it is evident that PayPal has been on a roll lately when it comes to investments. Another recent and notable investment by the payment processor came in the form of its partnership with Argentina’s MercadoLibre, Latin America’s answer to eBay, in which the company invested $750 million.
PayPal has been investing in other ventures to increase its overall portfolio. This partnership with Uber seems like a continuation of that process. But now with a high profile entity as Uber on PayPal’s side, it could certainly evolve into something more.