Internet auction giant eBay announced plans Monday to purchase the online payment firm PayPal for $1.5 billion. The purchase underscores the growing importance of online payment technology, which allows individuals to send each other money over the Internet.
The move marks a change of strategy for San Jose, CA-based eBay, which until now had competed against PayPal with its own online payment service, BillPoint. It is yet another victory for PayPal, which has seen its share price double since it went public six months ago, an anomaly for most Internet companies these days. But in this case, the numbers seem to prove themselves. EBay auctions account for 60 percent of PayPal’s current customers, and eBay has announced that efforts will continue to expand PayPal’s customer base, which currently is growing by nearly 30,000 customers per day.
In December 2001 Technology Review detailed the inner workings of PayPal in “Digital Cash Payoff.” PayPal’s success, the article reported, rested on two technological feats: simplicity and fraud prevention. In May 2001, those feats earned PayPal co-founder Max Levchin Technology Review’s Innovator of the Year award, the capstone of the TR100 award ceremony and symposium that showcased one hundred innovators under 35.
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