EBay pays $240M for mobile payments service Zong

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EBay has agreed to acquire mobile payments service provider Zong for approximately $240 million in cash. The online marketplace will use Zong's technology in conjunction with PayPal to give consumers flexible and secure mobile payment options, eBay said in a statement.

Menlo Park, Calif.-based Zong lets consumers verify payments on a mobile device or computer by entering a mobile telephone number and responding to an SMS prompt when making purchases. PayPal predicts it will record $3 billion in mobile transactions this year.

“From our point of view, Zong strengthens PayPal's leadership in mobile payments and digital goods. We did $750 million in mobile payments last year. On digital goods, we did $3.4 billion last year,” said Anuj Nayar, director of communications at PayPal. “Zong gives us the ability to authenticate and provide a PayPal account. You no longer need to associate a financial instrument with a PayPal account. You can just sign up with a phone number and it will get billed to your carrier.”

Zong has 70 employees, all of which will transfer to PayPal, said Nayar. EBay will eventually incorporate the Zong brand into that of PayPal, but the company does not have a time frame for doing so, he added.

Zong works with more than 250 mobile network operators, with capabilities in 21 languages and 45 countries.

EBay agreed to acquire Magento, an e-commerce software platform provider, on June 6 in a move that John Donahoe, president and CEO of eBay, said would help the company provide “access to a full set of commerce capabilities to build complete shopping experiences for merchants.”  

The company also agreed in April to acquire local advertising and location-based services company Where. EBay said at the time that the deal would “help retailers surface offers” for consumers on their mobile phones when they are in or near bricks-and-mortar locations.

EBay also bought e-commerce and interactive marketing services provider GSI Commerce for $2.4 billion in late March. The transaction strengthened eBay's position amongst “large merchants and brands,” said Donahoe, at the time.

Facebook selected Zong as the mobile payment provider for Facebook Credits last April.

The transaction, which is subject to regulatory approval, is expected to close in the third quarter.

Representatives from Zong could not be immediately reached for comment.

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