PayPal Rumoured to Be Buying Braintree to Improve Mobile Payment Options

by Istvan Fekete on September 25, 2013

PayPal is about to boost its mobile payment solution service, as it is nearing a deal to purchase Braintree Payments Solutions, according to people familiar with the matter speaking with the Wall Street Journal.

An eBay spokesman and Braintree CEO Bill Ready both declined to comment on Sunday. Terms of the deal couldn’t immediately be learned, and the people familiar with the discussions cautioned that talks could break down.

The deal could propel PayPal into the center of the burgeoning mobile commerce market.

Earlier this month, the news broke that Braintree, a Chicago-based payment gateway, is currently shopping for a buyer. The company has been looking for a buyer for while now. Google was among the previous bidders, but the deal fell through for some reason. More recently, it held negotiations with Square, but this deal fell through too – perhaps Braintree was asking too much. The negotiations with PayPal, however, have been steady, and they have apparently resulted in a successful deal.

Sources revealed that Braintree originally asked for $1 billion, which seems to be unrealistic, and an amount that only a limited number of companies can afford: Google, Square, and PayPal. Since the first two are out, PayPal remained their only hope.

According to the company’s latest available report, Braintree now processes $10 billion in payments on an annual basis, and the service is used by a number of startups and tech companies such as Airbnb, Fab, LivingSocial, Uber, Twilio, GitHub, and many others. Furthermore, Braintree operates Venmo, a mobile payment solution they acquired for $26.2 million last year.

The Braintree deal could grant PayPal access to data and transaction fees from Braintree’s network. Braintree charges a 2.9% commission and a 30-cent transaction fee.

The next boom is apparently the right mobile payment solution, and PayPal is after providing that tool. According to a research company, Gartner, mobile payments will grow by 31% this year to $235.4 billion, and will increase more than threefold by 2017.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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