EBay is ditching PayPal, the US giant which used to be part of the online marketplace, and instead will be turning to a highly valued fintech startup from Europe as its main payments processor.

The move is a huge vote of confidence for the startup, Adyen, and will fuel speculation around an IPO of the dutch firm which boasts a so-called unicorn valuation of more than $1bn.

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Backed by several well-known venture firms, Adyen also counts clients such as Facebook, Uber, Netflix and Spotify among its clients. It is expected to go public fairly soon, though executives indicated at the end of last year that a public listing would be unlikely to take place in 2018.

EBay will transition away from PayPal to Adyen over the next couple of years, making the latter the default option for buyers by 2021, though the former wil remain an option until 2023. The Silicon Valley firm said the switch would reduce costs for sellers on the platform.

PayPal was spun off from EBay in 2015. The online marketplace had bought it in 2002. Shares in PayPal fell as much as 15 per cent in after hours trading in the US after the news.