Braintree, which handles $2 billion of mobile payments annually, will join PayPal.
Katie Evans , Senior Editor
In yet another mobile initiative, marketplace operator eBay Inc. announced today it will buy Braintree, a payment processor, for $800 million in cash. The deal is expected to close in the fourth quarter.
Braintree will join eBay’s PayPal payment processing unit. EBay says the acquisition will accelerate PayPal’s innovation in mobile payments. Braintree will continue to operate as a separate service within PayPal under Braintree CEO Bill Ready, who will report to PayPal president David Marcus. Braintree's management team and employees are expected to stay in place.
Braintree’s clients include retailers like Fab.com, and Uber, an online service that matches ride-seeking people with taxi cabs and other car services. It says it processes more than $10 billion in payments annually, including $2 billion of payments made on mobile devices. Braintree has more than 4,000 merchant clients across more than 40 countries, and 25% of its payment volume comes from outside the U.S., the company says. Braintree forecasts $12 billion in payment processing volume for 2013, approximately one-third of which is expected to be mobile payments.
Venmo, Braintree's mobile application that enables consumers to pay one another using their mobile devices, is part of the acquisition and will help to contribute to PayPal's mobile payments capabilities, the companies say. PayPal projects mobile payment volume of more than $20 billion this year.
"The alignment with PayPal means Braintree can continue to push the boundaries of innovation while expanding into new markets with increased speed and confidence,” Ready says. “Our current customers and developer community can expect the same level of support and partnership they've always enjoyed, coupled with more resources."
In 2013, mobile commerce in the U.S. is projected to grow 63% to around $34.2 billion from $21 billion in 2012, according to the newly published Internet Retailer Mobile 500. That includes the combined sales of $25.4 billion of U.S. merchants ranked in the Mobile 500. It also includes an estimated $8.8 billion in U.S. merchandise sales on eBay. Mobile will account for nearly 13% of all U.S. e-commerce sales, up from just over 9% in 2012, according to the Mobile 500.