eBay is buying the payment division of Verisign. Most of us know it as the PayFlow product line. It's an interesting move that would allow eBay to deliver a consolidated API that includes both normal credit card processing and PayPal merchant services. I don't really have a feal for how merchants will respond to this.
It seems like the brick-n-mortar stores with an online presence could not care less about PayPal, so I think that might be a difficult sale. On the other hand, eBay merchants and lots of small online businesses seem to really like the PayPal system.
Personally, I think that if PayPal gets much closer to being a bank, they seriously need to be regulated like one and be forced to provide the same consumer protections that a bank would normally provide.
I also don't understand the argument for using PayPal for larger merchants based on cost. Some people seem to think it costs less to offer PayPal on their websites. I don't really see that much difference in price.