Wednesday, October 12, 2005

eBay and VeriSign announced an agreement late Monday for eBay to acquire VeriSign’s debit and credit card processing division. This division would become a part of eBay’s PayPal.

eBay will pay VeriSign $370 million in cash and stock for this division. Starting in the coming year eBay will begin using two-factor authentication from VeriSign. Two-factor authentication is a type of transaction protection that gives users digital certificates or one-time passwords helping to protect against identity theft.

“This acquisition allows PayPal to give our customers more choice in payment services and grow our merchant services business even more quickly,” said president of PayPal Jeff Jordan.

“In working with PayPal and eBay, we are going to be offering them our security technology, allowing them to offer their users stronger forms of authentication,” said VeriSign CEO Stratton Sclavos.

Last year VeriSign’s gateway business processed $40 billion in transactions. It is expected to generate an additional $100-million revenue for eBay in 2006. It is also expected to increase the customer base by 100,000. The acquisition is expected to close this quarter.