One of the world’s leading online payments systems is ramping up its efforts to acquire the services of fintech start-ups as the American firm bids to cement its position at the forefront of e-commerce and payment technology. PayPal recently completed a £1.65 billion takeover of Swedish fintech start-up, iZettle, which sells card readers to small or independent offline retailers. The move brings PayPal’s world-leading brand in-store to scale up its presence in high-street stores as well as online.
iZettle was founded in Stockholm back in 2010 and began by selling credit and debit card readers that could be connected to smartphone and tablet devices for swift contactless and chip-and-pin payments. In more recent years, it has since expanded its offering into building a dedicated e-commerce platform designed to monitor sales and keep up-to-date product inventories for customers and businesses alike. Since PayPal split from eBay and became a standalone online and mobile payments firm, the company has worked hard to strengthen its position in the marketplace with further acquisitions of top fintech talent. Peer-to-peer payments brand Venmo, which is gaining traction in the U.S., is now owned by PayPal; meanwhile, Swift Financial, a firm that provides business finance, was also purchased in 2017.
In a recent interview with the German business daily, Handelsblatt, PayPal’s President and CEO, Dan Schulman, confirmed that the company would be looking to expand its pool of talent under the PayPal umbrella. Schulman confirmed the company had a “healthy balance sheet” and that it was “ready to put it to work to buy more companies”. Within the interview, Schulman revealed that $3 billion a year has been set aside for potential acquisitions to “enable it to acquire specific capabilities”.
For almost two decades now, PayPal is recognised as a legitimate online payment method with online retailers. Its simplicity and convenience have also helped the platform become popular with burgeoning online industries such as iGaming, with online platforms now readily accepting PayPal as a deposit and withdrawal method. However, a string of other well-known digital brands is also beginning to ramp up their digital payment offerings and attempt to play catch-up. Apple Pay is winning the hearts of millennials, and a host of high-street banks are investing large sums of money in improving their online payment experiences for consumers, so it’s unsurprising that PayPal is looking to act and expand its capacity.
Some of the Highest-Profile Acquisitions Completed by PayPal
Although PayPal’s recent purchase of iZettle is its biggest-ever acquisition, the company has made a string of other high-profile purchases in the fintech space in recent years. Braintree was one of the first major acquisitions in 2013, becoming a permanent division of PayPal following its $800 million deal. Braintree, which owned Venmo prior to its sale to PayPal, now oversees mobile and web payments for e-commerce companies within PayPal. Braintree expanded its operations following PayPal’s acquisition into mainland Europe, Canada, Australia and southeast Asia.
Two years later, PayPal sought to go head-on with Apple Pay by purchasing another payments start-up in the shape of Paydiant in a $280 million deal. Paydiant, which specialises in the design and delivery of mobile wallet apps and has giant brands such as Subway in its client list, has since gone from strength to strength and become a legitimate alternative to Apple Pay and Google. PayPal has also had the foresight to invest in burgeoning digital markets, such as China and India. Its $890 million acquisition of the Xoom Corporation, an online money transfer and remittance provider that enables users to transfer funds, make payments and reload mobile phones from the U.S. to 70 countries worldwide, has helped make digital transactions a reality in these key growth territories.
Finally, PayPal more recently spent $183 million on bringing Swift Financial under its wing in 2017. This firm, established in 2006, has since lent funds to more than 20,000 small businesses. The purchase of Swift Financial has given PayPal the ability to offer small businesses cash advances and alternative finance when banks aren’t a viable lending option. It’s a clever strategic move on PayPal’s part. Increasing access to lending opportunities is critical to small firms thriving, driving merchant sales growth and payment processing volume on the PayPal network.