- Associated Press - Thursday, July 7, 2011

SAN JOSE, CALIF. (AP) - EBay Inc. is buying mobile payments provider Zong for about $240 million in cash so it can extend the reach of its PayPal online payments service.

The online auctioneer said Thursday that Zong will help strengthen PayPal’s position in the mobile payments and digital goods markets.

Zong lets people use their mobile phones to buy virtual goods inside social networks and online games. To use it, they enter their phone numbers, which Zong verifies and clears the payment. The charges appear on customers’ monthly cell phone bills.

The deal comes as the number of people spending real money for virtual goods in “FarmVille” and other Facebook games, or on outfitting their online avatars in youth-focused networks such as Stardoll and IMVU is growing rapidly.

EBay said Zong works with more than 250 mobile network operators in 45 countries.

Shares of San Jose, Calif.-based eBay climbed 34 cents to $33.26 in morning trading.

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