PayPal Buys card.io, Beefs Up Digital Wallet

NEW YORK ( TheStreet) -- eBay ( EBAY) subsidiary PayPal announced the acquisition of card.io on Tuesday, as it enhances its offerings in the fight for mobile payments.

As payment methods move away from credit cards, debit cards and cash to smartphones, tablets and other mobile devices, PayPal is investing in its digital wallet.

PayPal initially partnered with San Francisco-based card.io to develop a mobile application for PayPal Here, its global payment platform for small and medium-sized businesses, launched in March.

The mobile app from card.io lets developers read credit card information with a smartphone camera. The lack of extra hardware required for the app rivals Square and Google's ( GOOG) Google Wallet. Square sells its sleek card-reader hardware in Apple ( AAPL) Stores because of a partnership with the iPhone maker.

"While working with them card.io's team , we were simply blown away by the creativity and drive of their employees. They are a passionate and independent team that likes solving large, complex problems and we wanted them to join our team," Hill Ferguson, Vice President of PayPal Global Product, posted on PayPal's blog on Tuesday. The card.io team will join the PayPal global product team in San Jose, California.

Given the expected size and scale of the mobile payments market (expected to reach $245 billion by 2014 according to data from Ernst & Young), perhaps it's no surprise that PayPal is continuing to acquire companies to help boost its offerings.

--Written by Nathalie Pierrepont in New York.

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