Xoom acquired for $890 million
PayPal (PYPL) is gearing up to report its fourth-quarter earnings results after recently launching its international money transfer service, Xoom, in Canada. Xoom enables people to remit funds to more than 130 countries. While announcing the introduction of Xoom in Canada, PayPal noted that people in the country remit ~$24 billion annually.
Xoom was an independent company before PayPal bought it for ~$890 million in 2015. The deal to acquire Xoom was announced in July 2015 and completed in November that year, shortly after PayPal separated from eBay (EBAY) and went public.
PayPal increases competition with Western Union
The arrival of Xoom in Canada marks the escalation of the competition between PayPal and traditional remittance providers MoneyGram (MGI) and Western Union (WU), whose revenues fell 1.2% and 12.7% year-over-year, respectively, in the third quarter.
Canada is home to more than 6.5 million active PayPal users, suggesting an already huge market for Xoom in the country.
PayPal sets its sights on a $600 billion–plus prize
With Xoom, PayPal has its sights set on a global remittance market worth more than $600 billion. World Bank data show that global remittances rose to $613 billion in 2017 from $573 billion in 2016. Global remittances are expected to have risen to $642 billion in 2018. MoneyGram and Alibaba’s (BABA) Ant Financial tried to join forces to better capture this commercial opportunity, but the White House blocked their proposed union, as Reuters reported in January 2018.