EBay's PayPal cuts 445 jobs

  @julpepitone October 29, 2012: 2:55 PM ET
paypal layoffs
NEW YORK (CNNMoney)

PayPal appears to be feeling the pressure from rivals in the newly hot payment space, as the company is being forced to cut 445 jobs in a major product restructuring.

A Monday press release didn't go into deep specifics about the restructuring plan, which is meant "to simplify and speed up how products are developed." Nine PayPal product groups will be streamlined into "a single, more agile organization."

About 325 full-time PayPal employees, mainly in the product and tech sectors, were told Monday of the layoffs. PayPal is also cutting contracts with about 120 contractors, but it was unclear if they were also informed on Monday.

The 325 full-time employees being cut represent 2.5% of PayPal's full-time workforce of about 13,000. PayPal's parent company, eBay (EBAY, Fortune 500), will take a $15 million charge in the fourth quarter for the job cuts.

The short press release mentioned its aim to expand the number of online merchant partners, and to drive "payments innovation at point-of-sale retail."

PayPal is feeling the crunch from upstarts like Square, a service backed by Twitter co-founder Jack Dorsey. Square lets small businesses swipe credit cards through a tiny device that attaches to a phone, in exchange for one flat fee of $275 per month, or 2.75% per swipe.

PayPal offers a similar card reader that charges 2.7% per swipe. Online transactions range from 2.2% to 2.9%, depending on how big the merchant is, plus 30 cents per swipe.

Just last month, daily deal site Groupon (GRPN) announced its Payments service that aims to undercut the competition. Groupon Payments, which is available through an app for the company's merchants, charges 1.8% plus 15 cents per swiped transaction for MasterCard (MA, Fortune 500), Visa (V, Fortune 500) and Discover (DFS, Fortune 500) cards. For American Express (AXP, Fortune 500), it's 3% plus 15 cents per transaction.

That mobile payments sector is particularly white-hot, with tech and financial titans Google (GOOG, Fortune 500), VeriFone (PAY) and NCR (NCR, Fortune 500) launching their own services as well. To top of page



Join the Conversation

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.