eBay beefed up its payments business by agreeing to buy Zong, a company that specializes in allowing customers to pay for services through their wireless phone bill, for about $240 million in cash.
Once a pure-play Internet market house, eBay is evolving into a mobile payments processor. eBay's Payments business, including PayPal, grew 23 percent in net revenue, to $992 million, during its most recent quarter. But eBay only made $2.55 billion in revenue, which makes Payments just under 40 percent of the company's revenue.
Zong's business is facilitating mobile carrier billing, a convenience that allows customers to simply buy something over the phone or via a smartphone or tablet without the need to enter a credit-card number or other payment information. Instead, the charge shows up on the user's monthly wireless bill.
"Commerce is changing. With mobile phones, we walk around with a mall in our pockets," said Scott Thompson, president of PayPal, in a statement. "PayPal helps to make money work better for customers in this new commerce reality – no matter how they want to pay or what device they're using. We believe that Zong will strengthen this value by helping us reach the more than 4 billion people who have mobile phones, giving them more choice and security when they pay."
Currently, more than 8 million customers are making purchases on their mobile phones through PayPal, driving up to $10 million in mobile payments per day, eBay said. PayPal expects to transact more than $3 billion in mobile payments in 2011, it said, most likely excluding the effects of the Zong acquisition. eBay representatives weren't immediately available for comment.
eBay also said that it processes $3.4 billion in payments for digital goods via eBay for Digital Goods, which it launched earlier this year.