The online payment service acquired by eBay in 2002 was PayPal.
PayPal developed from the merger of Confinity and X.com, two early internet-finance companies. It became especially popular on eBay because buyers could pay sellers electronically without mailing checks or sharing card details directly with individual merchants. That strong connection made PayPal strategically valuable to eBay.
The acquisition was announced in July 2002 and formally completed on October 3, 2002. eBay paid about $1.5 billion in its own stock, bringing PayPal into the company as its principal online-payments service. PayPal later expanded beyond eBay to serve independent websites, merchants, and international users.
A frequent mix-up is Billpoint, which was eBay’s competing in-house payment service. eBay phased Billpoint out after acquiring PayPal. Another is Venmo: Venmo is also a digital-payment service, but it was acquired by PayPal in 2013, not by eBay in 2002.
PayPal remained an eBay subsidiary until its corporate separation was completed in July 2015.