July 7, 2011, 2:43 PM

eBay to buy mobile payments company

Zong enables consumers to charge purchases to their mobile phone bills.

Lead Photo

Users receive a text message to confirm the payment and another showing the amount billed to their mobile phone accounts.

Ebay Inc. today says it will buy mobile billing company Zong for $240 million, giving the online marketplace, and its PayPal Inc. payment subsidiary, a way to bill consumers directly to their mobile phone accounts. Ebay expects to finalize the purchase in the third quarter.

Zong account holders pay for purchases made with their mobile phones or on their computers by entering their mobile phone numbers on the payment screen of a participating retailer’s site. Once approved by the wireless carrier, the carrier adds the amount to an account holder’s cell phone bill. Zong says it works with more than 250 mobile network operators worldwide.

Currently, Zong is only available for digital goods such as songs, online video rentals and ringtones, and within online social sites, such as for Facebook Credits, a Zong spokeswoman says. Zong does not place a cap on the total number of purchases a Zong account holder can make each month because, the spokeswoman says, digital goods purchases typically are very low-value transactions. She adds that carriers typically do enforce a cap on purchases.

EBay and PayPal view this kind of transaction as a valuable tool for consumers, and as such Zong will have a part to play in their mobile payments strategy.

“We believe that Zong will strengthen value by helping us reach the more than 4 billion people who have mobile phones, giving them more choice and security when they pay,” says Scott Thompson, PayPal president.

PayPal expects to transact more than $3 billion in mobile payments in 2011. Currently, more than 8 million customers are making purchases on their mobile phones through PayPal, driving up to $10 million in mobile payments per day, the company says. 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.

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