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PayPal will be bigger than, CEO says

However, the shift will probably take four to six years, says John Donahoe in a talk at the Brainstorm: Tech conference.

PASADENA, Calif.--PayPal is just over a third of eBay's revenue at the moment, but the online payment service will ultimately be bigger than the company's flagship e-commerce site, its chief executive said Thursday.

"PayPal is a business that will be bigger than eBay," CEO John Donahoe said in a talk at the Fortune Brainstorm: Tech conference here. However, he said that shift will take four to six years.

John Donahoe
eBay CEO John Donahoe speaks at Fortune's Brainstorm: Tech conference on Thursday Ina Fried/CNET

Donahoe's comments came just as the company announced that it is opening up its PayPal platform to third-party developers. "There is this opportunity for an explosion of growth."

Among the uses, Donahoe said we are not that far off from the day where a restaurant beams a bill to your mobile device and you pay via PayPal.

Asked about Facebook's long-rumored payment service, Donahoe noted that online payments require a company to be part financial services outfit and part Internet concern. Those that have been one, but not the other, have failed, he said.

"People will find a much better solution building on top of the PayPal platform," he said.

Donahoe, who has been CEO about 15 months, said the company is a leader that is adjusting to shifts in the market. "We're making the tough changes we need to make," he said. "We need to evolve on an auctions site to an e-commerce site."

There is plenty of room for e-commerce to grow, Donahoe said, noting that only 5 percent of sales are online as compared to in stores. That could eventually grow fourfold, he said. "What portion of everything you buy will you ultimately buy online?" Donahoe said.

He said eBay has already come a long way. "We still get referred to as an online auctioneer, but we have moved way beyond that.

Right now, eBay gets about half its money from, with half of that auction-based sales and half from fixed-price sales.

As for the core auction business, eBay plans to announce a number of changes next week. Among those, Donahoe said that the company will expand the "eBay Bucks" loyalty program it has been piloting as well as offering telephone support to more buyers.

Given that PayPal may eventually eclipse in sales, moderator Adam Lashinsky asked if the company should change its name.

"That's the least thing I worry about," Donahoe said. "We'll probably hire some big fancy consultant who will give us some strange name," he quipped.

Corrected at 2:31 p.m. PDT: The last name of eBay's CEO was misspelled. His name is John Donahoe.