NEW YORK ( TheStreet) -- The last time I wrote about eBay ( EBAY), there were concerns about its long-term growth potential and management's ability to harvest value.
I wasn't suggesting that the company was struggling, but it was clear to the Street that PayPal, eBay's dominant person-to-person payment service, was been doing all of the heavy lifting, growing 30% in the most recent quarter. On Sept. 26, eBay decided it needed to protect that golden goose and picked off payment services system Braintree for $800 million. We can't say whether eBay overpaid, because Braintree is a private company and we can't get a comprehensive look at its financials. We do know, however, that Braintree processed more than $12 billion in transactions per year, which is more than what rival Square is reported to have processed. One thing that made Braintree attractive was that one-third of its transactions were mobile payments. eBay has been working hard to build its own mobile payment capabilities and inked a deal earlier this year with NCR ( NCR), which specializes in point-of-sale technology. The agreement allows for NCR's systems to integrate with PayPal's mobile services, which will enable customers to pay for goods and services using smartphones. The deal will also present PayPal users the option of using NCR's Convenience-Go app at gas stations and convenience stores. Essentially, eBay's management has gone to great lengths to guard PayPal from emerging mobile threats ranging from Square to accounting software giant Intuit ( INTU), which is gaining traction with its GoPayment system. Although PayPal has grown to interoperate with multiple financial networks around the world, the question, is to what extent Braintree can convince the Street that PayPal can become a long-term viable POS system. I'm not suggesting that PayPal doesn't already work. But a person-to-person transaction is different from a purchase at Lowe's ( LOW) or McDonald's ( MCD). To say it another way, I believe PayPal needs to see significant uptake and conduct more transactions in the realm of large retail operators if it wants to prove its worth. This is where buying Braintree became a no-brainer, pun intended.