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Why Did eBay’s PayPal Acquire Money Transfer Company Xoom?

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Nov. 20 2020, Updated 9:51 p.m. ET

eBay’s PayPal acquires Xoom for $890 million

eBay’s (EBAY) PayPal segment continues to make a number of acquisitions. According to a July 1 press release from eBay, PayPal will acquire online money transfer company Xoom (XOOM) for $890 million. PayPal will pay Xoom $25 per share, which will be a premium of 32% over Xoom’s closing price on July 1. Acquiring Xoom will help PayPal leverage the fast-growing remittances market.

Xoom has a presence in 37 countries, including the US, Brazil, China (FXI), India, Mexico, and the Philippines. Xoom will provide PayPal with a chance to not only grow its user base, but also to provide new geographies to grow its business where Xoom has a presence.

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PayPal’s major acquisitions: Paydiant and Braintree

This is not the first major transaction that PayPal has done in the last few years. One of the major acquisitions that PayPal made this year was that of Paydiant. Paydiant is a mobile platform that gives retailers the ability to develop customized applications such as customer-royalty programs in order to engage with their customers.

Paydiant also offers a mobile wallet platform for MCX, a group of top retailers such as Walmart (WMT), CVS (CVS), and Rite Aid (RAD). In January 2015, these retailers were in the news when they abandoned their support of Apple Pay (AAPL).

In 2013, PayPal also acquired Braintree, which is a payment company that supplies the technology to process mobile credit card transactions. Braintree’s Venmo app also helps people instantly wire money to the bank accounts of friends’ and family by using an app on their phones. These acquisitions should further enhance PayPal’s growth. As the chart above shows, PayPal has consistently managed strong revenue growth, although its growth slowed in 1Q15 due to currency issues.

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