In a little over a month, PayPal, the payment system giant, engaged in a record number of M&A transactions. A common theme is the strengthening of company’s position in the ever more competitive, yet compelling, B2B space.
First, in an effort to further expand into the physical payments market and increase foothold in Europe, PayPal scooped up the Swedish startup iZettle for $2.2 billion. While the record deal size was indicative of company’s ambitions and commitment, it turned out to be just a first step of an aggressive expansion into the merchant offering space.
Less than 10 days after the iZettle announcement, PayPal took over AI predictive retail startup Jetlore. The acquired technology analyses and interprets billions of customer and product data points aggregated from hundreds of merchant sites to learn about customer preferences and leverage on traders’ marketing efforts.
On 20th June, PayPal got back under the spotlights following the $400 million Hyperwallet acquisition. At first glance, the target is not a specific shot at the merchant space, but a direct competitor to PayPal’s legacy business. Yet, the prepaid cards and payee’s data aggregation features should further enhance PayPal’s overall offering.
A day later, the company made yet another clear step in the B2B direction by purchasing Simility for $120 million. Here, PayPal added a machine learning-based technology aiming to help online merchants spot fraudsters and improve risk management. Needless to say, Simility’s services will benefit from the ability to draw upon PayPal’s extensive data set on payment misconducts.
SORTIS view: The relatively low barrier to entry led to highly fragmented and competitive fintech landscape. However, given the size of the stakes and emerging leaders, we believe the industry is approaching a stage of consolidation. While PayPal has decent chances of capitalizing on the payment system transformation, victory is far from certain.
