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Zong strengthens PayPal’s leadership position in mobile payments and digital goods

eBay Inc has agreed to acquire Zong, a leading provider of payments through mobile carrier billing, for total consideration of approximately USD240 million in cash. Zong leverages connections with more than 250 mobile network operators around the world, offering localised, secure and easy-to-use payments capabilities for digital goods and services in 21 languages and 45 countries. Combined with PayPal’s leading global payment platform serving 100 million active accounts worldwide, the company expects that Zong will add complementary technology and talent that help strengthen PayPal’s leadership position in mobile payments and digital goods.

Zong allows consumers to easily pay for purchases from their mobile phones or computers through direct carrier billing. Consumers simply enter their mobile phone numbers. Then, in a matter of seconds, Zong verifies that number and clears the payment on the customer’s existing wireless service account.

With Zong, PayPal will have greater ability to offer consumers even more choices in how they want to pay – virtually anytime, anywhere. Both Zong and PayPal help to enable digital goods merchants to increase conversion, because they offer a faster, easier way for consumers to pay without leaving the merchant’s site.

“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 4 billion people who have mobile phones, giving them more choice and security when they pay.”

“Our customers love the convenience of paying with their mobile numbers – a number they know by heart, and a device that they always have with them,” said David Marcus, CEO of Zong. “We look forward to extending our services to PayPal’s more than 9 million merchants around the world. And we’re committed to working with carriers and merchants to help them drive more sales across devices.”

PayPal is an industry leader in mobile payments and digital goods. PayPal expects to transact more than USD3 billion in mobile payments in 2011. Currently, more than 8 million customers are making purchases on their mobile phones through PayPal, driving up to USD10 million in mobile payments per day. PayPal offers Mobile Express Checkout for merchants, PayPal Mobile Payments Library for developers, PayPal payment apps for iPhone, Android, Nokia and Blackberry, and location-based shopping with Where.

Earlier this year, PayPal launched PayPal for Digital Goods, a new product that lets buyers pay in two clicks without leaving their gaming experience or content site. In 2010, PayPal processed USD3.4 billion in payments for digital goods.

eBay Inc does not expect the acquisition of Zong to have a material impact on its financial guidance as issued in conjunction with its first quarter earnings release on April 27, 2011. The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in the third quarter of 2011.

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