For $240M, eBay Buys Zong for PayPal

by Mercator Advisory Group 0

Billing virtual goods transactions – ringtones, music, and now games and gaming accoutrements – to the mobile phone is a convenenient and practical way to pay when the product is made up of bits and bytes. And that’s the market Zong has pursued so successfully, recruiting over 200 telecom operators and processing millions of payment transactions for digital goods a month. That success is what made Zong so attractive to PayPal. Zong brings two arrows to the PayPal quiver. Zong uses the “bill to phone” funding souce. Zong also brings strong digital contents support. The combination fills a big hole in the PayPal market.

Another draw for PayPal—Zong has pretty massive international reach, offering mobile payments in 21 languages and 45 countries. The service’s technology is especially appealing in countries where mobile phone usage is high (as opposed to internet connectivity). Zong should also help PayPal expand its footprint in developing countries.

Zong’s principle competitor in the U.S. is BOKU. It will be interesting to see how long BOKU stays independent.

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