eBay acquired PayPal in 2002 for approximately $1.5 billion in stock, making the payment service a core part of eBay’s online marketplace.
PayPal originated from the merger of Confinity and X.com in 2000. The service enabled users to send and receive money electronically, making it especially useful for online auctions and transactions between buyers and sellers who did not know one another.
eBay first adopted PayPal as a payment option and then purchased the company after its use grew rapidly among eBay customers. The acquisition closed in October 2002, and PayPal became eBay’s primary payment service for many years.
PayPal was spun off from eBay as an independent public company in 2015. That separation is why PayPal is now a standalone payments business rather than an eBay division, although the companies remained commercially connected for a time.