eBay announced today it has agreed to acquire mobile payments provider Zong for $240 million in cash to bolster its PayPal platform and reach.
Zong provides a mobile payments platform that facilitates carrier-direct billing for digital goods and services. Users pay for their purchases by entering their mobile phone number and payment is billed to the customer's wireless service account.
The Menlo Park, Calif.-based company helped develop Facebook Credits and has partnered with many of the social gaming and virtual worlds' biggest companies, including Zynga, IMVU, Walt Disney's Playdom, and IAC's Zwinky.
The company claims a reach of 3.2 billion mobile users across 250 carrier connections.
"Our customers love the convenience of paying with their mobile numbers--a number they know by heart, and a device that they always have with them," David Marcus, CEO of Zong, said in a statement. "We look forward to extending our services to PayPal's more than 9 million merchants around the world. And we're committed to working with carriers and merchants to help them drive more sales across devices."
Founded in 2008, Zong is backed by Matrix Partners, Advent Venture Partners, and Newbury Ventures. The acquisition is expected to close in the third quarter of 2011.
eBay said it expects PayPal to handle more than $3 billion in mobile payments in 2011.
Thanks largely to PayPal, eBay's first-quarter revenue jumped 16 percent to $2.5 billion, compared to the first quarter of 2010, and profits soared by 20 percent to $475.9 million, or 36 cents a share.