eBay’s successful bid to acquire alternative online payment vendor Bill Me Later for $820 million, plus $125 million of outstanding options, promises major ramifications across both the online and physical payments space.

To begin with are the integration efforts that will bring together Bill Me Later’s on-the-spot, merchant-based credit service together with eBay’s dominant PayPal platform. PayPal had been offering a rival financing Pay Later service which analyst say had not garnered the cache of Bill Me Later’s alternative to credit cards, despite PayPal’s large overall advantage in online transaction volume. Maryland-based Bill Me Later was aimed at large merchants, so the PayPal connection could bring the popular service down market to less-traveled sites. For PayPal, this is about “consolidating the alternative payment space, and reaching for that strength in merchant relationships both of them have,” says Javelin senior analyst Bruce Cundiff. That includes the bricks-and-mortar space where Bill Me Later was piloting an in-store PayCapture service at undisclosed retailers.

The deal also throws up questions of what Amazon thinks of the merger, or how it will react. Amazon is a partial investor in Bill Me Later and introduced the platform in June to its own checkout page, including its one-click shopping option (previously approved customers can bill their account set up through Bill Me Later). Bill Me Later, however, was not yet a component of the Checkout by Amazon e-commerce payments product that Amazon had introduced for small on-line businesses.

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