In an about-turn from its previous policy, eBay is to spin off PayPal into a publicly traded company in the second half of 2015, a move it hopes will give the payments firm a clearer focus in the face of mounting competition from the likes of Apple Pay.

eBay has been under prolonged pressure from activist investor Carl Icahn to separate into two but had previously resisted, arguing they were better off together.

Now it has changed its tune, with the tax-free spin-off scheduled for the second half of next year, subject to market, regulatory and other conditions.

The company argued that in the fast-changing payments and commerce market, “separation best positions each business to capitalise on growth opportunities”.

PayPal is currently attempting to replicate its strength in online payments in the offline world through the use of mobile devices. However, some analysts say it is the existing player most in the firing line from the recently-launched Apple Pay.  And some argue a spin-off might actually expose it.

“On PayPal, investors will still contemplate the risk of PayPal directly competing with Apple Pay and Google Wallet, which will likely add some uncertainty to PayPal’s standalone valuation,” PiperJaffray analysts said, in a statement picked up by Reuters. Other potential rivals include Facebook and Twitter.

Icahn backed down from his demand earlier this year and eBay CEO John Donahoe (pictured) argued the internet giant had reached the spin-off decision conclusion on its own.

Donahoe will stay in his current position until separation, and then will take up an unspecified board role at one or both of eBay and PayPal. The new CEO of eBay will be Devin Wenig, while Dan Schulman will head PayPal. Schulman joined in 2014, having previously headed online and mobile payments at American Express.