This One Chart Explains Why eBay Is Spinning Off PayPal

On the last day of September, eBay announced it would spin off PayPal, its subsidiary, into a separate business. The two services were compatible in some ways. But in many ways eBay is actually holding back PayPal.

Based on company data charted for us by BI Intelligence, PayPal is growing much faster than eBay year-over-year when you compare the companies' keystone metrics: For PayPal, its total payment volume flowing through the service, and for eBay, it's the total merchandise volume.

Both services were growing at similar rates until the fourth quarter of 2013, when PayPal continued its upwards trajectory while eBay's growth started decelerating. So while PayPal represents a large portion of eBay's revenue (45% in Q2 2014), a large portion of PayPal's payment volume comes through third parties, which are often merchants.

And those same merchants may not want to benefit eBay, a competitor; splitting off PayPal should theoretically eliminate any potential conflict of interest.