Though tough economic times are slowing sales growth on eBay Inc.'s auction Web site, its payment business remains strong.
The San Jose parent of PayPal Inc. said Wednesday that 49% of the unit's second-quarter transaction volume came from outside eBay, the result of a multiyear campaign to win business from large merchants such as airlines and computer manufacturers that do not sell through auctions.
PayPal's payment volume grew 35% from a year earlier, to $14.9 billion. The number of transactions grew 26%, to 210.9 million.
The parent company highlighted the number of active PayPal accounts, which grew 19%, to 62.6 million. It was the second straight quarter the growth rate accelerated after stalling at 16% for three straight quarters. (PayPal defines "active" accounts as those that have handled at least one transaction in the past 12 months.)
"Across e-commerce, more people than ever are using PayPal," because "online retailers increasingly recognized PayPal's ability to deliver customers and increase conversion and sales," John Donahoe, eBay's chief executive, said during a conference call with analysts.
Its Marketplaces business line, which includes the flagship auction site as well as other e-commerce units like Half.com and StubHub, fared well but not as well as it has in previous quarters.
Worldwide gross merchandise volume in the business line grew just 8%, to $15.7 billion, after growing at least 12% in each of the previous four quarters.
Bob Swan, eBay's chief financial officer, said the growth in that business line was slowed by some promotional efforts, such as discounts and coupons that cut into revenue.
The average price of items sold on eBay has also declined, in part because of specific promotions but also for reasons beyond eBay's control, Mr. Swan said. "We believe the slowing economies, particularly in the U.S. and the U.K., have caused consumers to trade down to lower-priced items."
Second-quarter volume at eBay rose 20%, to $2.2 billion, and its net income rose 22%, to $460 million.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said eBay's problems have less to do with the ongoing economic conditions than with the growth of the Internet.
As small sellers mature, they learn that they can reach buyers through non-eBay channels, such as a Web site promoted through search engines, he said. "The rising prevalence of search engines like Google has led many merchants to move off eBay" or to split their attention between eBay and search engines. "This is a shift that is taking many years" and is likely to continue even if the economy improves.
That same trend is good for PayPal, Mr. Bezard said. "PayPal is operating in a niche — we are talking about e-commerce, and e-commerce as a whole has been growing … faster than the overall economy," he said. "That's a pretty nice spot to be in."
Worldwide, some merchants are finding ways to accept PayPal at the point of sale, Mr. Bezard said; for example, shops in France keep a computer next to the cash register to enable customers to use PayPal for purchases.
"I see signs of the progress of PayPal everywhere," Mr. Bezard said.
Also Wednesday, Mr. Donahoe announced that Rajiv Dutta, the former head of PayPal, has retired as the head eBay's Marketplaces line. He will be succeeded by Lorrie Norrington, who "served in a COO-type role for Marketplaces, so stepping up to lead eBay is a natural step."
Mr. Dutta will remain with eBay for the next several months and help with Ms. Norrington's transition, the company said.
