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eBay extends mobile commerce system with Zong buy

Only a month after it bought mobile commerce firm Magento, eBay has further bolstered its PayPal unit with the purchase of m-payments player Zong for $240m in cash.

PayPal is expanding its transactions methods from online to the burgeoning market for mobile payments, and plans to create a full end-to-end commerce platform. Zong brings it the valuable added dimension of carrier billing. Zong, which was backed by Matrix Partners, Advent Venture Partners and Newbury Ventures, works with 250 carriers in 45 countries to support operator billing.

PayPal has said it expects to do $3bn in mobile transactions this year and already has over 8m people making purchases on their mobile phones, with $10m in mobile payments every day.

“Commerce is changing. With mobile phones, we walk around with a mall in our pockets. PayPal helps to make money work better for customers in this new commerce reality – no matter how they want to pay or what device they’re using,” said Scott Thompson, president of PayPal. “We believe that Zong will strengthen this value by helping us reach the more than 4bn people who have mobile phones, giving them more choice and security when they pay.”

eBay has bought a series of start-ups to support its creation of a full commerce platform – these include Magento, Where, GSI, RedLaser, Fig Card and Milo, which have enabled it to move out of online-only transactions into real world payments and location aware services. With these

acquisitions, the auction giant aims to emulate Visa and build a broad system that will span mobile, online, social and local payments.

eBay is calling this system X.Commerce and is setting up a business division dedicated to it. This will create an open platform that support payments and end-to-end services to merchants, connecting them to consumers in an increasingly targeted, and even hyperlocal, way. Bringing Magento together with PayPal and GSI – a digital ecommerce and marketing firm – will put most of those X.Commerce elements in place.

Meanwhile, RedLaser specializes in comparison shopping; Milo links customers to a local inventory of products; Where added a location-based advertising network plus a local deals service and guides; and Fig Card is a competitor to offline payments start-up Square. And PayPal itself is working on its own mobile and point-of-sale offerings, leveraging its strong brand.