Payments giant PayPal to acquire Canada-based bill payment firm TIO, aiming to develop its customer value proposition and extend its market reach through accessing the global underserved segment. GlobalData Financial Services analyses the deal
Accessing the underserved segment could significantly extend PayPal’s customer reach while also providing an efficient tool to compete with banks for serving this increasing global population.
PayPal has announced it will acquire TIO Networks for C$304m ($233mn) and upon closing of the acquisition, TIO will operate as an integrated service within PayPal.
Speaking about the expected strategic benefits of the acquisition, Hamed Shahbazi, Chairman and CEO of TIO said the company’s mission harmonises with PayPal’s vision to democratise money by giving consumers more convenient and affordable ways to pay their bills.
As a leading multi-channel North American bill payment processor, TIO processed over $7bn in customer bill payments in fiscal year 2016 and serves 14 million customer bill pay accounts. The company has more than 10,000 billers partners, including some of the largest telecom, wireless, cable and utility companies, enabling it to efficiently process bill payments for its customers.
The acquisition will help PayPal enter the bill payments market and gain scale due to both TIO’s presence and partnerships in the North American market. It will also attract a new segment of customers by offering bill payments to current PayPal customers.
While bill payments increasingly move into the digital space, the acquisition can also help PayPal to extend their value proposition by providing TIO’s service to PayPal’s customers within its online and mobile product portfolio.
Since many of TIO’s services are specifically targeting the underserved segment, the acquisition can be an even larger market opportunity for PayPal to serve more than 33 million US households, and two billion people globally, a segment that has been traditionally difficult for PayPal to access, since its accounts are largely funded by bank accounts or payment cards.