Research firm Gartner expects the mobile-payments market to grow by 31% this year to $235.4 billion and to increase by more than three-fold by 2017. For this reason, PayPal is near a deal to buy Braintree Payments Solutions to thrust itself into the centre of the burgeoning mobile commerce market.
The deal for Braintree would give PayPal access to data and lucrative transaction fees from Braintrees expanding network, which currently processes more than $10 billion annually for companies like OpenTable, Uber Technologies and Airbnb. Braintree charges merchants a 2.9% commission and $0.30 transaction fee.
An eBay spokesman and Braintree CEO Bill Ready both declined to comment. Terms of the deal couldnt immediately be learned, and the people familiar with the discussions cautioned that talks could break down.
PayPal has pushed to expand beyond its original mission of processing payments for goods sold on eBay and other websites. A deal for Braintree could accelerate PayPals crucial goal to draw more revenue from smartphone and tablet users.
PayPal has been besieged by a raft of start-ups competing for a slice of the mobile payments pie. In particular, PayPal faces pressure from firms developing so-called digital wallets like Google, Square and Lemon that aim to replace physical wallets and credit cards.
Perhaps of particular appeal to PayPal is Braintrees Venmo division, which allows for consumers to pay each other for free through an app. Braintree acquired Venmo last year for $26.2 million.
Investors, too, are betting big on mobile payments: In the past year, venture capital firms and others have pumped nearly $800 million into the industry, an 11% jump from a year earlier, according to CB Insights.