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PayPal has officially announced that the company agreed to acquire a San Francisco-based online money transfer technology and services company Xoom to the tune of US$890 million.
Just weeks before the previously agreed upon split from eBay, PayPal has officially announced that the company agreed to acquire a San Francisco-based online money transfer technology and services company Xoom to the tune of US$890 million.
The deal is set to be closed during the fourth quarter of 2015, months after the planned split with Ebay on July 17.
“Today, this primarily cash-based system of sending money abroad can be time-consuming, insecure and expensive,” wrote PayPal CEO Dan Schulman in PayPal’s blog post. “There is no more personal payment experience than sending your hard-earned money home to help the people you love. Making international remittances simpler, safer and more affordable is something PayPal is excited to do for our customers.”
Excited to announce that @PayPal has agreed to acquire @Xoom to make international remittances better for people t.co/UfxWLloQ2L— PayPal (@PayPal) July 1, 2015
Excited to announce that @PayPal has agreed to acquire @Xoom to make international remittances better for people t.co/UfxWLloQ2L
With Xoom’s pre-existing payment/remittance infrastructure, the platform’s large user base of 1.3 million U.S customers and annual transactions of about US$7 billion in 37 countries, Paypal hopes to expand to emerging markets like India and China, and its user base of 68 million active users to focus on global growth.
PayPal president Dan Schulman stated in a press release:
“Acquiring Xoom allows PayPal to offer a broader range of services to our global customer base, increase customer engagement and enter an important and growing adjacent marketplace. Xoom’s presence in 37 countries – in particular, Mexico, India, the Philippines, China and Brazil – will help us accelerate our expansion in these important markets.”
The US$890 million valuation of the 14 year-old payment service provider Xoom derives from the company’s IPO in 2013, when it was valued at well over US$1 billion until its shares dropped substantially by the fourth quarter of 2014.
Due to the plunge of Xoom’s share prices, Xoom ended trading this week at US$21.36 on Monday. However, PayPal’s acquisition offered a value of US$25.05 per share, increasing the company’s value from US$807 million to $890 million dollars overnight.
Before its IPO, Xoom raised US$78 million from a series of funding rounds, which included prominent venture capital firms including Sequoia Capital, New Enterprise Associates, Fidelity Ventures, and Glynn Capital Management.
This deal has been the second acquisition of PayPal since the purchase of Paydiant, a mobile payment startup that was valued at US$280 million in March 2015.
PayPal has recently confirmed its partnership with two of the largest cryptocurrency processors – CoinBase and GoCoin – to allow its merchants to accept bitcoin, litecoin and dogecoin for digital goods and products. With PayPal’s growing interests in bitcoin, Xoom and PayPal may potentially work together to implement bitcoin in Xoom’s payment service platform. Xoom CEO John Kunze was open to experimenting with the digital currency stating in a 2014 interview with PYMNTS:
“If bitcoin could help us be more efficient, we’d use it.”
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