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E-commerce service provider eBay Inc.’s (EBAY - Analyst Report) existing payment platform, PayPal, has acquired a mobile app developer company -- StackMob. The terms of the deal were not disclosed.

Founded in 2012, San Francisco-based StackMob offers a platform that lets developers and companies create and manage mobile applications. It offers a custom API (application programming interface) that makes it easier for the developers to connect mobile applications to backend platforms such as Salesforce and SAP.  The company's customers include Red Hat (RHT - Snapshot Report), Adobe Systems (ADBE - Analyst Report), Verizon (VZ - Analyst Report) and Urban Outfitters (URBN - Analyst Report).

Management believes that the acquisition will aid the company to develop backend software for mobile apps, thereby enhancing PayPal’s mobile technology.

We believe this acquisition will support PayPal’s dominant position among mobile payment systems and increase its presence in mobile commerce apps. It will likely put PayPal in a better position against rival mobile payment systems such as Google Inc.’s digital wallet, Intuit Inc.'s (INTU - Snapshot Report) GoPayment and Starbucks-backed Square Inc. and others.

Today, the adoption of smartphones, tablets and other mobile Internet devices has become the biggest growth driver in the industry. Consumers, today, prefer the convenience of ordering and paying online over the hassles of shopping at brick-and-mortar stores.

In order to benefit from this change, PayPal is taking all the necessary measures for continued growth in the mobile space. It is pushing beyond its online payments service and expanding its offline, mobile and online offerings to stores, restaurants and other businesses.

Last week, eBay completed its Braintree acquisition, in order to enhance its mobile payment service. In March, the company acquired a mobile app development company – Duff Research – to help support PayPal’s dominant position in mobile payment systems. Also, eBay unveiled a hands-free payment system – Beacon – enabling consumers to make retail in-store payments without using their phone.

Though eBay’s payment business shows great promise, competition may be expected to pick up as banks and other companies announce their own payment systems. Major online retailers, such as Amazon.com (AMZN - Analyst Report) are not going to make things easy for eBay. Additionally, Google has been taking certain initiatives in the online retail/payments segment that potentially increase competition for the company.

Currently, eBay’s shares carry a Zacks Rank #4 (Sell).

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