eBay coughs up $370m for VeriSign service

eBay plans to pay $370m for an online payments service operated by VeriSign, as part of a broader agreement between the two companies, the auction giant said on Monday.

According to the two companies, VeriSign's payment gateway business, which allows small businesses to accept credit card and other payment types online, processed more than $40bn in customer transactions last year. eBay sees the service as a way to expand its own PayPal transactions division to a new category of small- and medium-sized business customers.

The VeriSign service "perfectly complements PayPal's existing payment services", PayPal president Jeff Jordan said in a statement. "This acquisition allows PayPal to give our customers more choice in payment services and grow our merchant services business even more quickly," he said.

The deal is one portion of a multipart agreement between the two companies. The pact will also see eBay tap VeriSign for a wider range of digital security protections.

Under the terms of the agreement, eBay will adopt a new kind of transaction protection from VeriSign that will give customers one-time passwords or digital certificates, guarding against identity theft. The new programme will begin sometime next year.

eBay said the VeriSign transaction service business is likely to generate about $100m in revenue for the company in 2006. The acquisition is expected to close in the fourth quarter of 2005.

John Borland writes for CNET News.com