Yahoo has confirmed the appointment of PayPal president Scott Thompson as its new CEO.

Thompson’s decision to jump ship comes at a strange time, as PayPal is one of eBay’s fastest growing divisions and is in a strong position to take advantage of the growth in m-commerce.

It also comes as a considerable blow to eBay, with CEO John Donahoe filling Thompson’s shoes while the company looks for a permanent replacement.

In an internal memo seen by AllThingsD, Donahoe said he was shocked by Thompson’s move and that he only found out about it on Tuesday afternoon.

eBay has been working hard to develop its online offering in recent years and in December predicted that it would see $5bn of sales via mobile in 2011, much of which would have be funnelled through PayPal.

It faces stiff competition from other finance companies – Visa and Citibank recently announced new online payment methods – but PayPal is in a strong position as it already has a solid customer base and is a recognised brand name for web payments.

So the decision to move to Yahoo, which has had a difficult time of late, seems slightly puzzling. As does the speed with which he was able to cut and run; Thompson starts in his new role on Monday.

For Yahoo’s part, chairman of the board Roy Bostock released a statement saying Thompson; “is the right leader to return the core business to a path of robust growth and industry-leading innovation”.

He said Thompson will work with the board to implement a strategic review, which may include new investments and disposition of assets.