EBay Continues to Complete the Puzzle: Acquires Zong

Continuing a recent string of acquisitions that tie together mobile capabilities, eBay announced it will acquire mobile payments provider Zong for $240 million in cash.

Naturally, Zong will join the PayPal unit and strengthen its position in mobile payments. This is an increasingly competitive space and more options for users making payments will be a competitive differentiator.

Lots of this choice comes down to payment method as Zong mostly runs transactions through carrier billing compared with PayPal’s verification and transaction engine that runs through credit cards and bank accounts.

The deal also makes sense as Zong has traditionally focused on lower priced virtual goods, which don’t overlap with PayPal’s larger transaction value. Zong continues to diversify and move up this chain though.

Stepping back, eBay’s acquisitions of RedLaser, Milo and Where (tied in with PayPal) have triangulated an overall strategy to gain greater access to users that are searching for and paying for items both online and offline.

Zong doesn’t fit into that value chain as well (offline shopping and payments), but does bolster eBay’s overall positioning when it comes to getting in front of m-commerce wherever it is happening.

In fighting to establish and own the standards in the nascent mobile payments space (the name of the game right now), money is not an object for deep pocketed companies like eBay to protect and grow share.

In that sense $240 million is nothing if mobile transactions are to reach the $670 billion by 2015 forecast by Juniper. Meanwhile, a not to shabby exit for Zong, which was founded in 2008 and has received $27.5 million to date.

More to come as we talk to these companies and examine the implications in the coming days.

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