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A Look at PayPal’s Partnership with Acorns Grow

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Dec. 11 2017, Updated 11:09 a.m. ET

PayPal’s deal with Acorns

Digital payment service provider PayPal (PYPL) recently unveiled a partnership with Acorns Grow, a mobile app that helps users invest their unused money whenever they make a purchase using PayPal. Acorns is a micro-investment platform where PayPal consumers can link their bank accounts, debit cards, or credit cards to the Acorns app, and make a purchase through the app. The app will round up their spending to the next dollar and then invest the change. PayPal users can also choose to make a one-time payment or make recurring payments for investments. Users can also manage their Acorns investments through the PayPal app. Acorns charges $1 per month to manage stock and bond investments.

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Why PayPal is teaming up with Acorns

The move to partner with Acorns will help PayPal attract users with little knowledge of different investment options or those that find it hard to invest money traditionally. The tie-up could also benefit eBay shoppers, whose payments are processed by PayPal.

The deal could also enable PayPal to diversify its business operations and expand into providing a wide range of financial services. PayPal has been offering a variety of financial services to its customers. In the past two years, PayPal has inked deals with over 20 companies, including Facebook (FB), Baidu (BIDU), Visa (V), and Mastercard (MA), to expand its scale.

PayPal invested around $30 million in Acorns about a year ago, in parts of the United States. The company now plans to roll out the service to its entire US customer base by early 2018. The Acorns app currently boasts more than 2.3 million US users. Robo-advisors Acorns and Betterment are expected to grow their assets under investment to $385 billion by 2021, up from $220 billion in 2017, according to financial research company Cerulli Associates.

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