Ebay has joined billions of people in the world by deciding to choose PayPal as it's payment source. On Monday, July 8, 2002
Ebay announced its plans to acquire PayPal in a deal valued at approximately $1.5 billion dollars.

You may remember back in May 1999 when Ebay bought BillPoint. In the spring of 2002, Ebay launched BillPoint. However, BillPoint has never made a dent in PayPal. PayPal says it handles 1 in 4 auctions won on Ebay.

eBay CEO Meg Whitman said the PayPal acquisition will help
both customers and the company's bottom line by speeding up the payment process. Buyers and sellers complete transactions days faster using electronic payments,Whitman said.

PayPal does come with its share of problems however.
A few states have begun to question whether the business constitutes illegal banking or money-transmitting services. PayPal also faces several class-action lawsuits from customers who claim the company illegally froze their accounts.

Ebay will more than likely focus on cleaning the bad reputation PayPal has for poor customer service.

Billpoint was losing around $10 million to $15 million per year, according to eBay's Dutta. One reason the service was not making money is that its customers are more likely to use credit cards to access the service, which costs eBay more money than if they use bank accounts. PayPal has a "better mix," Dutta said, and therefore lower costs. Billpoint will be phased out when the PayPal purchase closes late this year.