NEW YORK (CNNMoney) -- PayPal appears to be feeling the pressure from rivals in the newly hot payment space, as the company is being forced to cut 445 jobs in a major product restructuring.
A Monday, October 29th press release didn't go into deep specifics about the restructuring plan, which is meant "to simplify and speed up how products are developed." Nine PayPal product groups will be streamlined into "a single, more agile organization."
About 325 full-time PayPal employees, mainly in the product and tech sectors, were told Monday of the layoffs. PayPal is also cutting contracts with about 120 contractors, but it was unclear if they were also informed on Monday.
The 325 full-time employees being cut represent 2.5% of PayPal's full-time workforce of about 13,000. PayPal's parent company, eBay, will take a $15 million charge in the fourth quarter for the job cuts.
The short press release mentioned its aim to expand the number of online merchant partners, and to drive "payments innovation at point-of-sale retail."
PayPal is feeling the crunch from upstarts like Square, a service backed by Twitter co-founder Jack Dorsey. Square lets small businesses swipe credit cards through a tiny device that attaches to a phone, in exchange for one flat fee of $275 per month, or 2.75% per swipe.
PayPal offers a similar card reader that charges 2.7% per swipe. Online transactions range from 2.2% to 2.9%, depending on how big the merchant is, plus 30 cents per swipe.
Just last month, daily deal site Groupon announced its Payments service that aims to undercut the competition. Groupon Payments, which is available through an app for the company's merchants, charges 1.8% plus 15 cents per swiped transaction for MasterCard, Visa and Discover cards. For American Express, it's 3% plus 15 cents per transaction.
That mobile payments sector is particularly white-hot, with tech and financial titans Google, VeriFone and NCR launching their own services as well.