eBAY: Small Business Commerce Solutions

Verisign sold to eBay for $370 Million what they bought in 2001 for close to $800 Million: the online payment business acquired via Signio.

NY Times reports:

San Jose-based eBay will acquire VeriSign’s payment gateway business, which enables online merchants to process and manage electronic transactions. EBay plans to combine gateway with PayPal, its online payment service.

The tokens will be given to eBay customers worldwide sometime next year, PayPal spokeswoman Amanda Pires said. She added that the company has not determined whether it will charge for the tokens.

Some numbers:

The acquisition of the VeriSign business, which processed more than $40-billion in payments in 2004, will add $100-million to eBay revenue in 2006, and add a customer base of 100,000 small and medium-sized businesses.

EBay acquired PayPal in October, 2002, to add transaction fees from PayPal’s nearly 79 million accounts. The addition of VeriSign customers will help PayPal expand its “off-eBay business”.

EBay accounts for between $40-billion and $50-billion of the estimated $330-billion in global e-commerce payments, spurring PayPal to seek processing revenue from transactions that don’t involve eBay.

This makes a great deal more sense than Skype. Expanding market share in a large and growing market where eBay is already a leader, is a perfectly legitimate strategy.

Other related areas that may be worth investigating are FICO’s credit management business, if eBay’s goal is to broaden its offering to a more comprehensive portfolio of small business commerce solutions, and further away from its C-to-C roots.