The PayPal of today has come a long way from the 1998 startup that enabled people to transfer funds between Palm Pilots. As the company nears its spinoff from eBay, it is continuing its acquisitive streak with some transformative purchases.
PayPal's pending acquisition of Xoom was immediately interpreted as a threat to the likes of Western Union, but the combined company may have another target in its sights: M-Pesa, the mobile-based money transfer system popular in Africa.
The late-2013 purchase of Braintree addressed PayPal's problems in approaching up-and-coming developers. As part of that deal, PayPal also gained ownership of the mobile P2P system Venmo, which has already influenced the direction of PayPal's mainstream payment offerings.
PayPal's 2005 purchase of VeriSign Inc.'s gateway business brought it client relationships with about 100,000 non-eBay merchants. This $370 million deal came at a time when PayPal handled roughly 70% of its payments through eBay, and was aggressively looking to pursue relationships with mainstream merchants.
Bill Me Later
If you can't beat 'em, buy 'em. The instant credit company Bill Me Later replaced PayPal's in-house version, called Pay Later. Last year, PayPal rebranded this offering as PayPal Credit.
Zong, which lets consumers charge purchases to their wireless phone bills, may be more significant for the talent it brought to PayPal than the technology. Zong CEO David Marcus became PayPal's president a year after the 2011 acquisition, with the goal of operating PayPal with more of a startup mentality. Marcus left PayPal in 2014 for a role at Facebook.
Fig Card Corp.'s technology allows consumers to make in-person payments using a phone's WiFi signal to communicate with a USB device at the point of sale. PayPal bought Fig in 2011, and Fig's approach minus the USB plug-in strongly resembles that of PayPal's cloud-based wallet.
PayPal's deal for Paydiant better equips it to handle payments at the point of sale through phones, as opposed to the company's earlier effort to get to the point of sale through a plastic card and phone-number-and-PIN system. Paydiant's technology gives PayPal more options that work with merchants' existing technology.
PayPal's 2012 purchase of Card.io gave it ownership of a fundamental building block of mobile payments. Card.io's technology allows consumers to use a phone's camera to read account details off a plastic card. This greatly simplifies the process of entering payment details into a mobile app, reducing friction for any future PayPal mobile projects.