Seeking to increase its foothold among customers who prefer cash, PayPal will spend approximately $233 million to buy Vancouver-based bill payment firm TIO Networks. The acquisition is not PayPal’s first move to gain the business of consumers using cash. The company operates PayPal Cash, which enables consumers to use physical currency for online payments. PayPal Cash, powered by Green Dot, was a 2016 Pay Award winner.
TIO, which was founded in 1997, offers a network of 65,000 retail locations where consumers can pay bills with cash. The company claims 14 million customers and serves a network of some 10,000 billers and agents that include Global Express, ACE Cash Express and MoneyGram. TIO in 2016 processed 60 million transactions and its revenue hit $57.1 million.
TIO’s employees will join PayPal’s Canada operations, which are based in Toronto. PayPal expects the deal to close in the second half of this year. The deal marks the latest expansion for PayPal since its separation from eBay in 2015. Among the earliest such deals was PayPal’s $890 million purchase of international remittance firm Xoom Corp. Taken in total, these deals show that PayPal is bringing “difficult transactions into the digital market,” the company said.
“PayPal and TIO envision a future where paying a bill is as simple as PayPal already makes it to send money to friends or buy something online,” said PayPal CEO Dan Schulman. “Like PayPal, TIO is guided by a compelling vision to create innovative technology to democratize money and create greater economic opportunity for its customers, which include some of the 24.5 million U.S. households that are financially underserved.” He added that globally, more than 2 billion people lack access to basic banking services.
Those underserved consumers may represent a lucrative market, but that market may be shrinking in the U.S., at least according to one measure. The FDIC late last year said that 7 percent of U.S. households were unbanked last year, the lowest level since FDIC first began conducting its biannual survey in 2009. Still, the size of the financially underserved market in the U.S. increased by nearly 6 percent in 2015, reaching an estimated $140.7 billion, according to a study late last year from the Center for Financial Services Innovation (CFSI) and Core Innovation Capital.
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