October 10, 2005 2:34 PM PDT
eBay spends $370 million for PayPal rival
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.
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