eBay is purchasing payment startup Braintree for a whopping $800 million according to an announcement from earlier today. This acquisition is coming at a time where eBay is frantically trying to expand its current payment processor service PayPal in order for the service to stay as relevant as possible.
Even though eBay will technically own Braintree after the $800M acquisition goes through, Braintree will still operate as a separate entity for the foreseeable future. This means that current Braintree CEO Bill Ready will continue to manage daily operating at the company.
Braintree is a startup online and mobile payment processor and has already gained some major customer such as OpenTable, AirBNB, and Rovio.
Despite $800 million being a hefty acquisition price, the customer list that Braintree has been able to attain is worth it from eBay’s perspective, especially since eBay truly wants to become the most popular payment processor (and stay that way.)
Braintree’s service charges a 2.9 percent transaction fee to businesses along with a 30 cent per transaction fee. According to Braintree’s statistics, it will process more than $12 billion in transactions this year which should result in millions worth of profit.
To call Braintree a startup at this point is a little silly since the company is huge and now employs 200 people (all of which will stay with the company during the eBay acquisition.)
eBay says that it does not expect to close the deal with Braintree until the end of 2013 therefore 2013’s earnings report should not be impacted significantly by the acquisition.
Shares in eBay did increase by about 50 cents during trading hours today as a result of the announcement. However, eBay does expect to lower their financial outlook for the next year as a result of the acquisition, granted the long term payoff should be well worth it.