EBay to purchase Zong

EBay, the world's largest online marketplace, has agreed to buy closely held mobile-payment provider Zong for $240 million in cash, accelerating its expansion of smartphone services, Bloomberg.com reports.

The deal is expected to close in the third quarter and will not have a material effect on earnings, EBay said in a statement.

EBay is pushing deeper into smartphone services as its PayPal unit faces growing competition from Square and Google, which offer products making it easier for customers to make purchases with mobile devices.

According to The Register, the acquisition also bolsters PayPal's relationship with Facebook. The social network was already accepting payments through Zong, and last year began abandoned its rumoured “Facebook wallet” development work to sign on with PayPal for payments.

PC Mag states that currently, more than 8 million customers are making purchases on their mobile phones through PayPal, driving up to $10 million in mobile payments per day, EBay said.

PayPal expects to transact more than $3 billion in mobile payments in 2011, it said, most likely excluding the effects of the Zong acquisition. EBay representatives weren't immediately available for comment.