September 27, 2013

PayPal spends $800 million to acquire payment service Braintree

Smart merchants are keeping their eyes closely trained on the mobile payments industry, especially as more consumers get smartphones in their hands. Over the last few years, many payment experts have been touting the ability to pay with a smartphone at the cash register as the future of consumer payments and some service providers are bulking up their offerings to prepare.

EBay announced today that it is acquiring Braintree, a Chicago payments start-up, for $800 million in cash. The plan is to combine the technology with PayPal, the payments division of eBay. This is another company eBay has acquired recently, including Hunch, Svpply and Red Laser.

Braintree helps its clients process payments through the Web and mobile devices. According to executives at the company, their services process $10 billion in payments per year and has long been considered a "startup to watch." It was launched by Venmo, another popular application service that allows users to transfer funds through text messages.

David Marcus, the president of PayPal, spoke with the New York Times about the technology acquisition and said his company has been following the growth of Braintree for some time.

"Their obsession with removing friction for next-generation commerce matched our own," Marcus told the news source said in a phone interview. "They bet on mobile very early on and their growth there has been phenomenal."

This is another example of a major technology company improving itself by finding a startup that has created an in-demand and productive service. The technology acquisition will benefit both companies in the process.