The deal announced late Monday takes eBay's payments subsidiary another step into the physical world as PayPal continues to expand into processing transactions at brick-and-mortar stores. The company is also trying to stave off mobile payments competitors Square Inc., Google Inc. and others.
For Uber, the deal could make it easier to grow overseas. Uber CEO Travis Kalanick says his company is looking for a partner that understands German banks or does credit card processing in Mexico, for example.
Until now, people had to use credit cards to pay for Uber rides, which limited Uber's popularity in countries such as Germany, where most people pay with their bank accounts. PayPal payments are now available to Uber customers in Germany, Italy, France, the Netherlands and the U.S.
The deal, which Kalanick and PayPal President David Marcus called a "co-marketing" partnership, follows eBay Inc.'s acquisition of mobile payments company Braintree in September. San Francisco-based Uber was already using Braintree to process credit card payments, but the PayPal deal lets people use bank accounts or debit cards as well.
Forrester Research estimates that mobile payments will reach $90 billion by 2017 in the U.S.Suggest a correction