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If Paypal corners any more of the online payment market
everyone, particularly an individual who is more buyer than seller, is
really in trouble. The so-called resolution program is worthless when it
comes to trying to recoup payment when there is nondelivery by a big
seller. There is a more concerted effort by Paypal at obfuscation than even in
eBay's program, from which I was referred. More to follow in due course. Craig,
Vancouver
----- Original Message -----
Sent: Tuesday, October 11, 2005 12:22
PM
Subject: [MOPO] EBay's PayPal to buy
VeriSign unit for $370 mln
EBay's PayPal to buy VeriSign unit for $370 mln
By
Eric Auchard
SAN FRANCISCO (Reuters) - EBay Inc. (EBAY.O:
<http://today.reuters.com/business//stocks/overview.aspx?symbol=EBAY.O>Quote,
<http://today.reuters.com/business//stocks/CompanyProfile.aspx?symbol=EBAY.O>Profile,
<http://today.reuters.com/business//stocks/ResearchReports.aspx?symbol=EBAY.O>Research)
will
buy VeriSign's payment processing business for $370 million and
merge it
with its PayPal unit as part of a wider e-commerce payment
services and
security alliance, the companies said on Monday.
The move was seen as
letting PayPal, already the largest online
payments company, expand faster
beyond its core audience of
eBay-based transactions and to compete better
with credit cards as an
online-payment system, analysts
said.
VeriSign's payment gateway software connects Web businesses
with
payment processors generally run by major banks. VeriSign also is
the
dominant supplier of software used to manage secure credit
card
transactions between consumers and Web sites.
PayPal said the
payment gateway business would generate an
incremental $100 million of
revenue for it in 2006.
VeriSign Inc. (VRSN.O:
<http://today.reuters.com/business//stocks/overview.aspx?symbol=VRSN.O>Quote,
<http://today.reuters.com/business//stocks/CompanyProfile.aspx?symbol=VRSN.O>Profile,
<http://today.reuters.com/business//stocks/ResearchReports.aspx?symbol=VRSN.O>Research)
shares
rose 5.2 percent to $21.08 in after-hours trade following the
announcement
of the deal.
Shares of eBay were unchanged, after closing up 56 cents,
or 1.4
percent, to $40.46 in Nasdaq trading ahead of the
news.
SECURITY TOKENS
As part of the deal, eBay will buy up to
one million tokens from
VeriSign that display constantly-changing numbers
used as passwords
to increase security. So-called 'two-factor
authentication' relies on
a set password and a number from the token, which
is synchronized
with a central server.
Rival RSA Security Inc.
(RSAS.O:
<http://today.reuters.com/business//stocks/overview.aspx?symbol=RSAS.O>Quote,
<http://today.reuters.com/business//stocks/CompanyProfile.aspx?symbol=RSAS.O>Profile,
<http://today.reuters.com/business//stocks/ResearchReports.aspx?symbol=RSAS.O>Research)
pioneered
the market for such digital security tokens, but VeriSign
has been
expanding, and the tokens are being embedded in computers,
mobile phones or
offered as key chain accessories.
"We are working furiously to make
customers as safe as they can be
and to give them the tools to make their
transactions as secure as
possible," Jeff Jordan, PayPal's president, said
in a phone interview.
PAYPAL EXPANSION
Legg Mason analyst Scott
Devitt said the deal promises to give PayPal
a leg-up in becoming the
accepted payment mechanism system on
VeriSign's 100,000 or so small
business sites.
"Strategically the deal absolutely makes sense," and
was at a
favorable price, relative to revenue acquired, for
eBay.
VeriSign's payment software system -- which handled more than
$40
billion in payments during 2004 -- will help PayPal expand its
push
into the merchant services market, analysts said.
Two-thirds of
PayPal's $6.5 billion in payment transactions were done
on eBay during the
second quarter. EBay wants to expand the remaining
third, called merchant
services.
"Given the early stage revolt among retailers against rising
credit
card processing fees, particularly among online retailers, we
believe
PayPal is well positioned to take share in this market," CSFB
analyst
Heath Terry said in a note to investors.
Some 22 percent of
U.S. e-commerce transactions passed through the
VeriSign software gateway
in 2004, eBay spokeswoman Amanda Pires
said. PayPal payments accounted for
9 percent of e-commerce payment
service volumes, she said.
The
gateway competes with software from CyberSource Corp. (CYBS.O:
<http://today.reuters.com/business//stocks/overview.aspx?symbol=CYBS.O>Quote,
<http://today.reuters.com/business//stocks/CompanyProfile.aspx?symbol=CYBS.O>Profile,
<http://today.reuters.com/business//stocks/ResearchReports.aspx?symbol=CYBS.O>Research)
and
Authorize.net, a Lightbridge Inc. (LTBG.O:
<http://today.reuters.com/business//stocks/overview.aspx?symbol=LTBG.O>Quote,
<http://today.reuters.com/business//stocks/CompanyProfile.aspx?symbol=LTBG.O>Profile,
<http://today.reuters.com/business//stocks/ResearchReports.aspx?symbol=LTBG.O>Research)
unit.
At
the agreed price, the deal with Verisign is unlikely to stir up
concerns
like those that followed Ebay's previously announced
agreement to acquire
Web communications company Skype Technologies
for up to $4.1 billion,
Devitt said.
Some investors questioned whether Skype's revenue and
profit outlook
were strong enough to justify the price, and why auctioneer
eBay
should get into Web telephony.
The VeriSign gateway business
should generate a 20 percent operating
margin, based on a pro-forma
calculation that assumes the two
companies had been merged for a full year,
the companies said. More
financial details will be provided when the deal
closes, which
executives said they expected to occur this
quarter.
<
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