PayPal Holdings Inc. (PYPL) is a dominant player in digital payments through its web and mobile app payment platforms. It's maintained its strong position against a rising number of fintech startups and technology giants such as Apple Inc. (AAPL) and Alphabet Inc. (GOOG). The company provides a variety of digital payments services to 305 million account holders worldwide, enabling them to send and receive money, hold balances, withdraw funds, and perform other functions.
PayPal was first developed as a money-transfer service by startup Confinity Inc. in 1999. In 2000, Confinity merged with Elon Musk's online banking site X.com, which later changed its name to PayPal before going public in 2002. PayPal soon after was acquired by eBay Inc. (EBAY) for a reported $1.5 billion and remained part of the company for the next 13 years until it was spun off in 2015. In 2019, PayPal's revenue was $17.8 billion on a total payment volume of $712 billion. It has a market value of nearly $209 billion.
PayPal has made a number of key acquisitions in recent years to fuel its growth. In most cases, these deals have expanded PayPal's customer base or its service offerings. Together, these acquisitions have helped PayPal to sharply boost its payments volume, a key metric used by investors to measure the company's health and progress. Below, we'll look at five significant PayPal acquisitions. A special note that PayPal does not provide revenue and profit figures by subsidiary.
Honey Science Corp.
- Type of Business: Online Coupons and Discounting
- Acquisition Price: Approximately $4 billion
- Date it was Purchased: November 20, 2019
Honey is an online coupon and discounting company that provides a browser extension app that automatically applies coupons on e-commerce sites. Founded in 2012, Honey now has more than 17 million members and has provided more than $1 billion in savings to members since its launch. More recently, the company has expanded to offer a mobile shopping assistant, price-tracking tools, and other services. PayPal's roughly $4 billion purchase of Honey was its largest acquisition ever. The acquisition fulfills a double goal: to streamline the online shopping and payments experience for PayPal customers, and drive consumer engagement and sales for merchants.
- Type of Business: Payments Processing
- Acquisition Price: Approximately $2.2 billion
- Date it was Purchased: September 20, 2018
Sweden-based iZettle was founded in 2010 as a mobile credit card payment service. It also boasted the first-ever mini chip card reader. Over time, the company has grown to offer small businesses a gamut of services such as software support and financing solutions across Europe and Latin America. iZettle is a major competitor of PayPal rival Square Inc. (SQ). PayPal acquired iZettle mainly to expand its in-store presence with small businesses to compete with Square, and to grow its presence in the European and Latin American markets.
- Type of Business: Mobile Payments
- Acquisition Price: Approximately $800 million
- Date it was Purchased: September 26, 2013
PayPal parent eBay acquired Chicago-based Braintree for $800 million in cash in 2013, helping PayPal to become a global one-stop shop for merchant account services and payment processing. Founded in 2007, Braintree has developed a payments gateway that powers and automates online payments for merchants and online businesses, serving 45 countries and 130 currencies. The acquisition also included peer-to-peer mobile payments app Venmo, which Braintree had bought a year earlier. Braintree remained part of PayPal after its spinoff from eBay.
- Type of Business: Payment Processing
- Acquisition Price: Approximately $890 million
- Date it was Purchased: November 12, 2015
Founded in 2001, Xoom is an international payment processing company that allows users to send money, pay bills, reload phones, and accomplish other tasks for friends and family in other countries. At the time of the deal, Xoom had more than 1.3 million active U.S. customers who used its platform to send international remittances totaling $7 billion annually. PayPal's acquisition of Xoom helps it to expand into new markets worldwide, including building its remittances business.
Hyperwallet Systems Inc.
- Type of Business: Global Payouts
- Acquisition Price: Approximately $400 million
- Date it was Purchased: November 15, 2018
Hyperwallet was founded in 2000 as a global payouts company that provides small organizations a seamless way to distribute funds to payees. Hyperwallet's unique platform allows companies to send and receive payments in any currency to nearly every country in the world. PayPal's purchase of Hyperwallet represents a key move in the company's growing efforts to streamline and enhance its e-commerce platform offerings.