Paypal is paying $370m for VeriSign's payment portal business.

It will incorporate the portal with its merchant services to better target small and medium businesses. The payment gateway provides a way for merchants to add simple, scalable payment pages to their websites. Verisign claims more than $40bn in transactions went through the portal in 2004.

VeriSign is also providing PayPal, and parent company eBay with security services.

eBay and VeriSign have also signed a multi-year agreement which will see eBay buying up to two million two-factor authentication tokens. This will be offered to eBay and PayPal customers in 2006. It is expected to generate an extra $100m incremental revenue in 2006.

The acquistion will be paid for in cash and/or eBay shares and is subject to the usual shareholder and regulator approval - it should close in the last quarter.

Read the press release here. ®