MasterCard, one of the largest payment networks, said earlier this year that it plans a new fee for digital wallet operators like PayPal starting in June.
The actual dollar amount PayPal ends up paying may not be that large, analysts say. However, they are worried that this is part of a broader move by payment networks to target PayPal, which has become more of a direct competitor recently.
"Payment networks are taking the gloves off," Bill Carcache and Brian Nowak, analysts at Nomura Equity Research, wrote in a note to investors on Monday. "The incumbents will do everything in their power to prevent PayPal from riding on their rails without extracting a toll."
eBay shares slid 0.5 percent to $50.18, on Monday afternoon, leaving them down about 4 percent so far this year.
Since San Jose-based eBay mentioned the MasterCard fee in a regulatory filing on Feb. 1, the company has lost about 12 percent of its market value -- while Amazon is down about 1 percent and the Nasdaq Composite is up 2 percent.
Analysts put that under-performance down to this new fee and concern about rising tension between PayPal and the payment networks.
"The fact that PayPal, as the largest digital wallet player, could be singled out by a network like this is clearly a negative," said Ken Sena, an analyst at Evercore Partners.
PayPal is moving from its online roots into the physical retailer world, where the vast majority of payments still take place. It is a big opportunity for the business and that has driven eBay shares higher in the past year.
However, as a payment option in lots of physical stores, PayPal will be a much bigger threat to network operators like MasterCard, Visa and American Express, analysts say.
Historically, Visa and MasterCard viewed PayPal's success in the online world cautiously, but they were also happy because the service generated extra e-commerce transactions that ultimately got processed through their networks.
"Now that PayPal has started moving to the physical point of sale, however, competitive intensity levels are rising as PayPal encroaches deeper into what has traditionally been the incumbents' turf," Nomura's Carcache and Nowak said.
At a conference last month, Chris McWilton, president of MasterCard's U.S. Markets, complained that PayPal "rides for free" on other companies' business models.
"They've got to be cautious that they don't get too big and start making people wake up and say, wait a minute, I'm actually losing business here because of your moving into the physical space," he added.
Staged digital wallets share less information with card issuers and the networks, creating customer service problems and making it more difficult to deal with card rewards programs, Carcache and Nowak explained.
MasterCard may be doing this to encourage PayPal and other staged digital wallet operators to share more valuable information about where transactions take place and with which merchants, Evercore's Sena said.
Sena and other analysts are concerned that Visa and other networks will create similar digital wallet fees.
A spokesman for San Francisco-based Visa declined to comment on Monday.
If all payment networks assess such fees, but they are limited to transactions in the United States and exclude payments on eBay's marketplace, that could shave about two cents a share off eBay's annual profit, Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, estimated recently.