Ebay Acquisition of Paypal

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PayPal is an internet-based financial services provider that enables users to make electronic payments and transfer money online through email or phone number. PayPal is one of the world’s largest internet payment companies. It operates as an acquirer, performs payment processing for online vendors, auction sites and other commercial users and charges a fee for its service. EBay is an online marketplace that enables individuals and business to buy and sell online. It enables commerce, retailing and digital marketing for merchants. EBay wanted an in-site electronic payment system and went ahead to acquire Billpoint. This acquisition did not work for its purpose because Billpoint was not popular at the time and this created lots of problems for eBay customers. EBay then needed a more popular in-site medium that customers could use to make transactions which lead to the acquisition of PayPal. In the fall of 2012, eBay acquired PayPal for $1.5billion. At the time, eBay had already become a powerhouse in online auction marketplace. It possessed a legion of global customers and PayPal on the other side has gained huge popularity in the United States and become a leading company in providing online payment services. By acquiring PayPal, both companies leveraged each other’s customer base and strategic positioning. One of the most important reason why this acquisition was successful was that both companies provides complementing services. EBay needed an online payment system that has good popularity that PayPal already possess. By offering such complementary services, both companies were able to successfully integrate and make doing business more convenient. The Synergy between the two companies rapidly boosted more business for each operation, and this led to PayPal becoming the default select of online transfer payments. In the early 2000’s, many smaller competitors

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