eBay's PayPal subsidiary will acquire VeriSign's payment gateway business, which allows merchants to authorize, process and manage online payments. PayPal plans to accelerate its merchant services business by expanding its customer base to tens of thousands of new small and medium-sized business customers online.

PayPal will pay approximately $370 million to purchase VeriSign's payment gateway business, payable in cash and/or eBay stock. The VeriSign gateway processed more than $40 billion in total payment volume in 2004. eBay said it expects the business to generate an incremental $100 million of revenue next year.

The companies said Monday the acquisition was part of a strategic alliance that calls for the two companies to collaborate on payment services and security initiatives for ecommerce. VeriSign will provide eBay and PayPal with a suite of security services that includes the deployment of two-factor authentication to help protect against online identity theft.

http://www.verisign.com

https://www.paypal.com