AN FRANCISCO, July 8 — The online auction giant eBay announced plans today to acquire PayPal, a rapidly growing start-up that lets people make payments via e-mail. The move will let eBay take a bigger share of many sales made on its own site, and to expand its business to earn money on tens of thousands of transactions made elsewhere on the Internet.

The $1.5 billion deal, which was negotiated and completed in a week, brings together two companies that are already intertwined, and that have been among the few Internet companies left thriving. PayPal is widely used to transact business by buyers and sellers on eBay, a situation that, before this deal, created both interdependency but also rivalry between the two businesses.

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In an effort to not lose that transaction business to PayPal, eBay has previously promoted its own payment service, called Billpoint. It now appears that eBay's investment in Billpoint — including $35 million it spent in March to acquire outstanding equity it did not own in Billpoint — will have been in vain, as eBay said today that it would now shut down its own system.

Several financial analysts who cover eBay said today's deal appeared to be a worthwhile investment for eBay. Previously, it took roughly 7 percent of each auction transaction, but now will take roughly 10 percent of those transactions in which buyers and sellers use PayPal (rather than payment alternatives like check or money order).

But analysts gave more mixed reviews as to whether the deal was a positive one for PayPal. "This is good news for eBay, but bad news for PayPal," said Gwenn Bezard, an analyst with Celent Communications, a market research firm, who said that PayPal's shareholders would have benefited more if the company remained independent. PayPal went public in February; under today's deal, eBay will pay 0.39 a share for each share of PayPal, a roughly 20 percent premium.

PayPal, Mr. Bezard said, seemed likely "to create a unique payment platform on the Internet and is ending up a company whose focus is a niche market."

Some 17 million people have signed up for a PayPal account, into which they can transfer money from a bank or credit card account. When they make a purchase using their PayPal account, the seller pays a fee of roughly 3 percent, a figure that has risen steadily over the last several years.

But PayPal has become an increasingly popular payment mechanism with a viral effect; the more people who sign up for PayPal, the more it becomes attractive to new users looking to buy and sell online and who have a bigger network to interact with. It has become an alternative and a threat to credit cards, which owners of small businesses say they cannot afford, and sometimes are prohibited from using altogether.

PayPal has also become highly popular among online casinos, with industry analysts estimating that 10 to 15 percent of PayPal's revenue in the first quarter — when it processed $1.3 billion in transactions — came from online gambling payments. No more: eBay announced it would no longer allow PayPal to be used for gambling because of the murky legal and regulatory issues involved in online gambling, said Rajiv Dutta, eBay's chief financial officer.

One indirect impact from the PayPal acquisition is that it could further hurt the online casinos, which have had an increasingly hard time finding ways to transact business. In recent months, a growing number of banks have forbidden the use of credit cards they issue from being used for online gambling.

PayPal is also used in thousands of other transactions, including person-to-person money transfers, and accepted at many e-commerce Web sites, including pornography sites and small online businesses that do not use credit cards.

Still, the biggest chunk of PayPal's business — 61 percent — comes from processing transactions on eBay. Shawn Milne, an analyst with the SoundView Technology Group who follows both companies, said PayPal faced a tough decision, but made the right one, in deciding to sell to eBay, given that the company was constantly worried that eBay would find a way to cut into its business.

The interdependency cuts both ways. Of the sellers on eBay who accept electronic payment, 75 percent accept payment by PayPal, whereas 27 percent offer Billpoint, Mr. Milne said. "They've decided to change horses, and go with the leader," Mr. Milne said of eBay's decision to close Billpoint, which it originally acquired in 1999.

Mr. Dutta said the PayPal acquisition provided new opportunities as well. He said roughly $7 billion of $12 billion in annual sales on eBay were completed using check or money order — or something other than online payment. But he said the company intended to integrate PayPal more closely with eBay both to improve the service for existing users, but to also try to entice new users to PayPal, with each online transaction benefiting eBay.

Mr. Dutta sought to fend off criticism that eBay would focus PayPal exclusively on eBay and not continue its growth on businesses outside of the auction sites.

"This has the potential to expand the definition of eBay," he said. "We are now able to work with sellers and merchants — and not just on eBay."