PayPal, owned by e-commerce company eBay Inc, did not disclose a purchase price.
Duff Research has built about 40 mobile apps for companies that include TiVo Inc and Adidas AG. The firm's 18 employees, including co-founder Geoff Chatterton, will join PayPal, the companies said.
PayPal is battling a host of start-ups, such as Square Inc, that are trying to chip away at its lead in online and mobile payments.
PayPal has a reputation as slow and less innovative than some other technology companies and under new President David Marcus it is trying to change that.
"What we're really after with this deal is the innovators and experience," said James Barrese, chief technology officer at PayPal. "We are reinventing our organization to be more technology led."
The Duff Research team will remain together at PayPal and work on projects aimed at making PayPal's main digital wallet product easier to use for consumers and merchants, Barrese said.
© Thomson Reuters 2013
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