PayPal said Monday it has agreed to acquire Paydiant, a digital payment company known for creating private label payment services for retailers like CVS and Subway. The company, which is owned by eBay Inc., did not disclose the amount it will pay for the startup.
PayPal’s high-profile acquisition reveals how difficult it has been for eBay’s soon-to-be spun off payments unit to remain competitive in a white-hot digital payment industry that’s becoming increasingly crowded with tech titans like Apple, Samsung and Google. Recode reported PayPal will shell out $280 million for Paydiant.
Paydiant licenses a digital payment platform to large retailers and banks create their mobile wallets within their own branded apps. PayPal has tried unsuccessfully to market its own in-store payment options as it branches outside of online purchases.
The acquisition will help PayPal forge an alliance with retailers who do not want to be indebted to tech companies like Apple, Google and Samsung as they continue to pay credit card processing fees.
Apple Pay was launched late last year and already accounts for more than 1 percent of digital payments. Samsung just announced its own payment system, which works with standard magnetic credit card readers, and Google reached a deal with mobile carriers to appear on millions of smartphones by default.
Paydiant was founded in Wellesley, Massachusetts, in 2010, and allows retailers to add loyalty programs and digital coupons into their existing mobile apps, in addition to digital payments. It also works with MCX, a group of retailers including Walmart, Target, Bestbuy and CVS, which offers a mobile wallet called CurrentC. The app was criticized last year after some partner retailers refused to accept rival Apple Pay.