News: eBay Buys BillPoint
April 6th, 2005 by Laurie BarakSource: cnet
eBay said it is acquiring online payments company PayPal in a deal valued at $1.5 billion. eBay will also phase out its own competing service, eBay Payments by BillPoint.
PayPal, which went public earlier this year, allows consumers to make and accept payments over the Internet without using a credit card. The bulk of its business comes from eBay auctions.
With the acquisition, eBay gains control of the popular electronic payment service favored by many of its customers. “PayPal is the ‘gorilla’ in the online payment market, as eBay is the ‘gorilla’ in the online auction market,” Merrill Lynch analyst Justin Baldauf said in a research note.
eBay bought BillPoint in May 1999 but did not fully launch the service until spring 2000. Despite heavy promotion, BillPoint has struggled to win market share from PayPal.
According to PayPal, it handles payment for one in four winning auctions on eBay. Given that eBay is hoping to boost the use of electronic payments for auctions, analysts said it was easier to buy its rival than to beat it.
Link to the complete cnet article here.
