Online payments titan, PayPal, says it is buying international money-sending service Xoom in a deal valued at $US890 million ($A1.16 billion).

PayPal, a subsidiary of eBay, will pay $US25 per share of Xoom in what amounts to a premium of 32 per cent over the stock’s average price over the past three months.

PayPal touted Xoom as a leading service for letting people in the United States pay bills or send money to family members or friends in other countries using mobile phones, tablets or computers.

“Expanding into international money transfer and remittances aligns with our strategic vision to democratise the movement and management of money,” PayPal president, Dan Schulman, said.

Acquiring Xoom will let PayPal broaden its array of services and expand in important markets, particularly China, Brazil, India, Mexico, and the Philippines, according to Schulman.

Xoom has a presence in 37 countries.

The acquisition was expected to close in the final quarter of this year.

US online marketplace giant eBay last week disclosed a plan to spin-off its PayPal online payments unit, which will trade as an independent.

The plan calls for the distribution of PayPal stock to eBay shareholders on July 17, with the financial unit starting to trade under the symbol PYPL on July 20.