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eBay purchases mobile payments firm Zong for $240 million in cash

by Morgan Phelps

In a bid to strengthen PayPal’s payment platform, eBay has dropped $240 million in cash to purchase venture-backed mobile payments provider Zong. Through Zong, a company that was spun off from mobile monetization provider Echovox, consumers can post payments to their cellphone bills, mainly for the purchase of virtual goods within games.

Paypal, which works with 9 million merchants, has previously focused on microtransactions and digital goods, but has not offered a way for payments to be posted to the mobile phone bill. PayPal CFO Patrick Dupuis said talks between the companies made it clear that they had a similar idea for the future of the market, noting that PayPal has been “growing by leaps and bounds ourselves, so it was nice to find someone who shares so closely how we can transform commerce.”

The addition of Zong gives eBay access to to 3.2 billion mobile consumers using approximately 250 carrier connections worldwide. Zong, which competes with payment providers such as Boku, Billing Revolution, BilltoMobile and mopay, is also known for its work with Facebook to sell the social networking site’s virtual currency over the phone.

PayPal has been dabbling in several mobile payment efforts of its own, including in-store mobile payments, microtransactions in applications and on the mobile web and PayPal for digital goods. These allow users to pay in two clicks without exiting their gaming experience or content site.

The mobile payments market is still greatly in flux, so making a bet on carrier billing could be a bit risky, as Mashable pointed out. In order to succeed in this growing and ever-changing area, eBay must stand out against the efforts of other wireless carriers, as well as alternative solutions such as Google Wallet and Square.