eBay Buys An $800 M Friend For PayPal – Braintree
Enid Burns for redOrbit.com – Your Universe Online
Auction site eBay acquired global payment platform company Braintree, which will become part of PayPal, once the deal goes through. According to inside sources eBay will pay approximately $800 million in cash for the company.
“Braintree is the perfect fit with PayPal,” said eBay President and CEO John Donahoe, in a corporate statement. “Bill Ready and his team add complimentary talent and technology that we believe will help accelerate PayPal’s global leadership in mobile payments. Together, we expect that PayPal and Braintree also will accelerate our leadership in supporting developers who are creating innovative solutions for next generation commerce startups.”
Braintree has developed deep roots in the enterprise space with a number of big clients. The company’s platform handles payments for businesses such as Airbnb, OpenTable, TaskRabbit and Uber. PayPal will gain access to both data and transaction fees that Braintree collects, the Wall Street Journal reports.
“PayPal has pushed to expand beyond its original mission of processing payments for goods sold on eBay and other websites. A deal for Braintree, based in Chicago, could accelerate PayPal’s crucial goal to draw more revenue from smartphone and tablet users,” wrote Wall Street Journal’s Ben Fox Rubin and Greg Bensinger.
eBay has said that Braintree will continue to operate as a separate service within PayPal once the acquisition is completed. The company will operate under the PayPal unit and Braintree’s CEO Bill Ready will report to PayPal President David Marcus. The Braintree management team and employees will be able to keep their positions within the company as part of the terms of the deal.
“PayPal was built on helping entrepreneurs grow great businesses online,” said PayPal President David Marcus. “With this deal I believe that we will accelerate our capabilities for developers, entrepreneurs, merchants and companies that are building the future.”
The acquisition news is the second time this week that PayPal and Braintree have been in the news together. Earlier this week Facebook began testing Autofill with PayPal. Autofill is a layer for mobile payments that fills in credit card and shipping details, offered by Facebook. PayPal and Braintree were both named as payment partners in the new offering.
PayPal will add meaningful volume to its network with the Braintree acquisition. Braintree expects to process around $12 billion in payments this year, the Telegraph reports. Braintree has a presence in more than 40 countries across North America, Europe and Australia and accepts payments in over 130 countries.
While Braintree works with merchants and businesses, its mobile payment application, Venmo, lets users pay each other on mobile devices. It also works across a number of social networks. “That now becomes part of PayPal, which is projecting mobile payment volume of more than $20 billion this year,” reports Doug Tsurouka of Investor’s Business Daily.
At the time of the acquisition announcement eBay stock was up 2.5 percent in morning trading to reach $55.55 by the closing bell.