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Analysts largely cheered the deal as a positive for eBay. Caris & Co.’s Scott Tilghman writes “we believe the relationship will enable eBay to better capitalize on m-commerce opportunities as PayPal’s acceptance at domestic merchants nears ubiquity. Notably, PayPal customers will retain the ability to fully manage their digital wallets, which means they will be able to determine the source of funding for their purchases (credit card, debit card, bank account, Bill Me Later). Although the roll-out is not scheduled until 2Q13, we believe the existence of 50 million PayPal accounts in the U.S. will drive upside to existing FY13 expectations.”

Robert W. Baird’s Colin Sebastian writes “PayPal’s ability to leverage Discover’s network of more than seven million retail locations should provide meaningful scale in the “bricks and mortar” channel, which to-date is limited to 16 retail test partners. Moreover, we believe th

is initiative further distances PayPal’s digital wallet ahead of other mobile payment platforms, such as Google Wallet, Isis, and Square. Importantly, PayPal is generating meaningful growth through its core online payment service, and the offline opportunity is incremental.”

Lazard Capital Markets Atul Bagga writes “Despite growing competition in online payments and the digital wallet space, we remain optimistic about PayPal’s positioning given its large and growing userbase and increasing ubiquity in online checkout which we believe could help PayPal sustain momentum in the online payment business. We are also optimistic about its expansion outside of online payments, including in-store payments and mobile, which we believe significantly broadens the company’s opportunity and will be a growth driver over the longer term.”
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