Summary:

Though eBay is buying Braintree to make PayPal more relevant in mobile, PayPal is showing it has plenty of game in the new smartphone-driven economy. The deal makes PayPal an Uber payment option on two continents.

When eBay announced last month it was buying Braintree, the idea was to give PayPal’s mobile developer program a shot in the arm – to make PayPal more relevant to the growing number of mobile commerce and collaborative consumption businesses breaking new ground on the smartphone. Well it turns out PayPal’s developer program wasn’t doing half bad on its own. It revealed on Monday that Silicon Valley’s car-hailing darling Uber is its newest payments partner.

Starting today Uber riders in the U.S., France, Germany, Italy and the Netherlands will have the option of paying their fares with PayPal. Until now Uber payments could only be charged to a credit cards – transactions that in the U.S. at least are processed by Braintree.

PayPal mobile app walletThat not only gives PayPal’s legions of customers an easier way to activate Uber services, but also opens up Uber to a much broader range of riders. There are many more ways beyond a credit card to fund a PayPal account – a point head of growth and special operations Stan Chudnovsky spelled out clearly on PayPal’s blog.

“Working together, we are able to help expand Uber’s global reach and provide an easier way for consumers to experience their first Uber ride,”  he wrote. “In countries where credit card use is not as prevalent, the ability to pay with PayPal is a big win for consumers.”

PayPal has actually been working behind the scenes with Uber since 2012 when it bought credit card scanner Card.io, which many mobile apps use to enter payment details into a smartphone. Earlier this year PayPal began beefing up its developer program with the aim of making it more mobile app friendly. For instance, instead of redirecting customers to a secure mobile login webpage for every transaction, PayPal started processing payments directly within the app.

The new features were available at the time to only a handful of developers, and it turns out that Uber was one of the first companies on board. It’s  first developer to integrate with PayPal’s new SDK, paving the way for the rest for the rest of PayPal’s developer community early next year.

This is a big deal for PayPal because Uber is a big deal when it comes to the changing mobile payments market. Not only is Uber a collaborative consumption company that is distributing payments to multiple parties, it’s doing so in many different currencies and many different formats. Uber is even allowing customers to split fares between riders. (If you want an idea of how complicated those transactions can become, check out my talk with Airbnb’s VP of engineering Mike Curtis at Gigaom’s Mobilize conference last month).

Companies like Braintree and Stripe were founded to power these kinds of transactions, and ultimately eBay is paying a whopping $800 million for Braintree to tap into this lucrative market. But it looks like PayPal and Braintree are going to be working side-by-side for a while even after the acquisition closes this quarter.

Photo courtesy of Shutterstock user Konstantin Sutyagin

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