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PayPal acquires payment transfer service Xoom for $890 million

PayPal Xoom

Online payments company PayPal has agreed to acquire San Francisco-based payments transfer service Xoom for $890 million, in an all-cash deal. The deal is expected to be completed in the fourth quarter of 2015, and will provide PayPal access to Xoom’s 1.3 million active customer base in United States, who the company claims remitted $7 billion in the 12 month period ending on March 31, 2015. Post acquisition, Xoom’s about 300 employees and its CEO John Kunze are expected to join PayPal.

PayPal’s in-coming CEO Dan Schulman said that acquiring Xoom will allow them to offer more services to their global customer base and help accelerate their expansion in key international markets, including Mexico, India, the Philippines, China and Brazil. Most of PayPal’s transactions are commercial payments, this acquisition will allow it to tap into a completely new set of customers.

Founded in 2001, Xoom offers online and mobile based international remittances services to 37 countries, and charges between $5 to $10 depending on the size of the exchange. It also makes a sizable amount by keeping the difference in exchange rates. Xoom users can also pay bills or recharge mobile phones on behalf of their friends or family through the service. The company registered sales worth $159 million in 2014, up 30% from 2013. It however, reported losses of $26.3 million in 2014.

This is PayPal’s biggest acquisition since it acquired Chicago-based payments gateway Braintree, in an all-cash deal worth $800 million, back in September 2013. It’s worth noting that Braintree owned peer-to-peer money transferring service Venmo was one of the primary reasons PayPal had acquired the company. Earlier this year, PayPal had also acquired mobile payments and loyalty technology company Paydiant for an undisclosed amount. Re/code had reported that PayPal paid $280 million for the company.

Spin-off from eBay

The planned spin-off of PayPal from eBay Inc. is slated to be completed on July 17. The eBay board approved the separation last week. Post the split, eBay stockholders will be receiving one share of PayPal common stock for each eBay share they held before July 8. Will it revive PayPal’s fortunes? Following the split, PayPal will have $5 billion in cash and zero debt, so it wouldn’t be surprising if PayPal makes some more acquisitions this year.

Also Read: PayPal ordered to give customers $15M in redressal; $10M in penalty

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    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ