In what may help PayPal deepen its strength in supporting mobile payments for virtual goods, eBay bought Zong for $240 million in cash.
Zong specializes in mobile carrier billing, where users can put charges on their monthly phone bills, and the company has relationships with more than 250 mobile carriers in 45 different countries. So this could help PayPal serve consumers in emerging markets, where people may not have easy access to credit.
The acquisition also comes at a time when smartphones have overtaken feature phones as the majority of mobile device purchases in the U.S. Yet Apple controls billing for digital goods on its platform while Google strongly encourages the use of Checkout in Android Market, which could limit Zong’s potential in terms of smartphone billing revenue in developed markets.
“Most of e-commerce will shortly become m-commerce,” wrote Zong’s CEO David Marcus in a blog post on the acquisition. “I am so excited by the unique combination of PayPal’s 8 million merchants, brand power, risk management expertise, and financial stability, with Zong’s Carrier DNA, its largest direct carrier payments network, product innovation, and best-in-class carrier billing technology.”