eBay has purchased Zong, the mobile payment provider, to give PayPal’s mobile commerce position a significant boost.
Zong’s purchase price was $240 million, and eBay intends to use it to connect to Zong’s tremendous 250 wireless carriers and 3.2 billion users. Consumers are already using Zong in order to make purchases simply by using their mobile telephone numbers. This allows the mobile payment service to verify the transaction so that it can add the charge to the mobile service bill of the shopper.
Zong is already well recognized by gamers using Facebook, who load their credits or coins for FarmVille and other social games.
As Zong is already established with billions of internationally verified mobile accounts, this will provide PayPal Mobile – which is anticipating earnings of over $2 billion in 2011 – with a needed leg up over its primary competition in the market, such as the joint ventures between Visa and MasterCard and mobile service providers such as Verizon, AT&T and T-Mobile, as well as Google Open Wallet.
Members of PayPal will now be able to connect their bank accounts or credit card accounts to the mobile service so that they can pay for purchases from merchants and eBay auctions. Zong – like other mobile payment services – removes the need for bank and credit card links, meaning that customers don’t need to connect their private information to payments, increasing their security.
PayPal makes a flat fee of 30 cents from the merchant for every purchase, as well as an additional two to three percent of the price of the mobile sale.
