October 10, 2005 2:34 PM PDT

eBay spends $370 million for PayPal rival

eBay plans to pay $370 million for an online payments service operated by VeriSign as part of a broader agreement between the two companies, the auction giant said Monday.

According to the two companies, VeriSign's payment gateway business, which allows small businesses to accept credit card and other payment types online, processed more than $40 billion in customer transactions last year. eBay sees the service as a way to expand its own PayPal transactions division to a new category of small- and medium-size business customers.

The VeriSign service "perfectly complements PayPal's existing payment services," PayPal President Jeff Jordan said in a statement. "This acquisition allows PayPal to give our customers more choice in payment services and grow our merchant services business even more quickly."

The deal is one portion of a multipart agreement between the two companies. The pact will also see eBay tap VeriSign for a wider range of digital security protections.

Under the terms of the agreement, eBay will adopt a new kind of transaction protection from VeriSign that will give customers one-time passwords or digital certificates, guarding against identity theft. The new program will begin sometime next year.

eBay said that the VeriSign transaction service business will likely generate about $100 million in revenue for the company in 2006. The acquisition is expected to close in the fourth quarter of 2005.

42 comments

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Tragic.
We just spent $3k on an SSL certificate and payment processing package from Verisign. And now we're going to be relying on Paypal for payment processing? We purposefully didn't choose them in the first place.

I guess we'll have to find someone else when it's time to renew our secure server certificate.

Paypal... blech.
Posted by TV James (680 comments )
Reply Link Flag
Just curious
What's wrong (in your honest opinion) with PayPal? Could you
elaborate?
Posted by JaquesLenoir (30 comments )
Link Flag
Ony $370M?
If VS's payment business will have revenues $90-100M/yr., then it'll pay for itself in 4 years (very much unlike Skype), so eBay got a nice deal. However, VS's probably stands to make a ton of money for identity-guarantee services, so that's why they might've let payment business go.
Posted by Rusdude (170 comments )
Reply Link Flag
Revenue != Profit
Article didn't have many details but it's unlikely that this acquisition will pay for itself in four years unless there's some serious growth.
Posted by stlc_8tr (9 comments )
Link Flag
great deal
I am thinking around the same lines as you. I think it is a great deal for both companies. Both companies will benefit greatly from this and VS will really get their name out there
Posted by (4 comments )
Link Flag
Ony $370M?
If VS's payment business will have revenues $90-100M/yr., then it'll pay for itself in 4 years (very much unlike Skype), so eBay got a nice deal. However, VS's probably stands to make a ton of money for identity-guarantee services, so that's why they might've let payment business go.
Posted by Rusdude (170 comments )
Reply Link Flag
Revenue != Profit
Article didn't have many details but it's unlikely that this acquisition will pay for itself in four years unless there's some serious growth.
Posted by stlc_8tr (9 comments )
Link Flag
great deal
I am thinking around the same lines as you. I think it is a great deal for both companies. Both companies will benefit greatly from this and VS will really get their name out there
Posted by (4 comments )
Link Flag
jamster!!! what!!
Verisign owns jamster, that annoying commerical thats on your tv 300 times a day telling you to press " 929292" for the stupid "insert here" that no one really wants?? this company owns them, what a discrace, and ebay has lost their minds first skype and now this, they have to much money to waste
Posted by digitallysick (103 comments )
Reply Link Flag
Wrong
eBay isn't buying that part of VeriSign's business, just the payment processing division. VS owns a wide portfolio of products.
Posted by Rusdude (170 comments )
Link Flag
Ebay is nuts, they paid $4B for Skype
so buyers can talk to sellers. That's something that turns me off. I hate talking to sales people. That's another reason why I pay at the pump. So I don't have to encounter some clerk.
Posted by bobby_brady (765 comments )
Link Flag
jamster!!! what!!
Verisign owns jamster, that annoying commerical thats on your tv 300 times a day telling you to press " 929292" for the stupid "insert here" that no one really wants?? this company owns them, what a discrace, and ebay has lost their minds first skype and now this, they have to much money to waste
Posted by digitallysick (103 comments )
Reply Link Flag
Wrong
eBay isn't buying that part of VeriSign's business, just the payment processing division. VS owns a wide portfolio of products.
Posted by Rusdude (170 comments )
Link Flag
Ebay is nuts, they paid $4B for Skype
so buyers can talk to sellers. That's something that turns me off. I hate talking to sales people. That's another reason why I pay at the pump. So I don't have to encounter some clerk.
Posted by bobby_brady (765 comments )
Link Flag
Outstanding!
I am delighted that they listened to my suggestion. That's why they are the best.
Posted by larypcrews (2 comments )
Reply Link Flag
Outstanding!
I am delighted that they listened to my suggestion. That's why they are the best.
Posted by larypcrews (2 comments )
Reply Link Flag
No more pay service competition
Look for high fees and/or higher commissions.
Posted by bobby_brady (765 comments )
Reply Link Flag
No more pay service competition
Look for high fees and/or higher commissions.
Posted by bobby_brady (765 comments )
Reply Link Flag
eBay acquiring the Payment Services division of VeriSign
Adam,

As an employee of VeriSign working in the Payment Services division- which PayPal, an eBay company acquired yesterday- I'm confident that eBay's $370 million investment will be worth every penny for the shareholders, customers and employees. Just wait and see how we leverage the synergies!
Posted by cttucker1 (2 comments )
Reply Link Flag
eBay acquiring the Payment Services division of VeriSign
Adam,

As an employee of VeriSign working in the Payment Services division- which PayPal, an eBay company acquired yesterday- I'm confident that eBay's $370 million investment will be worth every penny for the shareholders, customers and employees. Just wait and see how we leverage the synergies!
Posted by cttucker1 (2 comments )
Reply Link Flag
Not sure...
.... if I would ever use Verisign's services, but I am quite sure that I
will never use PayPal's services. I do not and will not shop on Ebay,
and hopefully PayPal is not anything I will have to encounter for a
long long time
Posted by Earl Benser (4310 comments )
Reply Link Flag
PayPal is actually pretty good
they are more than an auction payment service. They are really more like a bank. They even do currency transfers for cheaper than your bank will. Clark Howard (famous consumer radio personality)actually recommended them to a listener the other day who needed to transfer some business money from Canada to the US and her bank wanted an arma and a leg for to convert to American dollars.

They also have MasterCard debit cards and credit cards. Also, money in your PayPal accounts make market rate interest.
Posted by ChazzMatt (169 comments )
Link Flag
Reply to not sure..
First off, not sure why you would want to comment on this topic if you never use and never want to use the products. Second off, you say you hope you never have to use paypal; why is that? It is a great service that has great money and identity protection. That is a great plus with internet shopping.
Posted by (4 comments )
Link Flag
Not sure...
.... if I would ever use Verisign's services, but I am quite sure that I
will never use PayPal's services. I do not and will not shop on Ebay,
and hopefully PayPal is not anything I will have to encounter for a
long long time
Posted by Earl Benser (4310 comments )
Reply Link Flag
PayPal is actually pretty good
they are more than an auction payment service. They are really more like a bank. They even do currency transfers for cheaper than your bank will. Clark Howard (famous consumer radio personality)actually recommended them to a listener the other day who needed to transfer some business money from Canada to the US and her bank wanted an arma and a leg for to convert to American dollars.

They also have MasterCard debit cards and credit cards. Also, money in your PayPal accounts make market rate interest.
Posted by ChazzMatt (169 comments )
Link Flag
Reply to not sure..
First off, not sure why you would want to comment on this topic if you never use and never want to use the products. Second off, you say you hope you never have to use paypal; why is that? It is a great service that has great money and identity protection. That is a great plus with internet shopping.
Posted by (4 comments )
Link Flag
eBay's Busy Spending...
eBay + Skype.

eBay + PayPal + VeriSign's payment services.

Hmmm... Ok. Diversifying? Are these purchases related? What's the plan?
Posted by Mendz (519 comments )
Reply Link Flag
eBay's Busy Spending...
eBay + Skype.

eBay + PayPal + VeriSign's payment services.

Hmmm... Ok. Diversifying? Are these purchases related? What's the plan?
Posted by Mendz (519 comments )
Reply Link Flag
Tragic.
We just spent $3k on an SSL certificate and payment processing package from Verisign. And now we're going to be relying on Paypal for payment processing? We purposefully didn't choose them in the first place.

I guess we'll have to find someone else when it's time to renew our secure server certificate.

Paypal... blech.
Posted by TV James (680 comments )
Reply Link Flag
Just curious
What's wrong (in your honest opinion) with PayPal? Could you
elaborate?
Posted by JaquesLenoir (30 comments )
Link Flag
 

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