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Important real estate

PayPal is leading a payment company acquisition binge

By John Detrixhe

PayPal is tearing through a flurry of payment company acquisitions, having snapped up four in just a five-week period this year.

Investors are bullish on the sector as it combines Silicon Valley’s technology euphoria with a mega-trend shift to digital transactions. This year has already been a record for payment company deals, with $46 billion in acquisitions (paywall) though June, according to Dealogic. That compares with $33 billion in total for last year

PayPal wants to keep up the pace, spending as much as $3 billion a year on buyouts, CEO Dan Schulman said in an interview with Handelsblatt. The shopping spree has given the San Jose, California-based company a growing number of links in the chain we use to make digital transactions. Recent acquisitions include iZettle, a Swedish mobile payments company, and Hyperwallet, which businesses can use to pay employees around the world (the deal size is only shown if it has been verified by Pitchbook):

Target Date Amount ($ million)
Simility June 22, 2018 120
Hyperwallet Systems June 19, 2018 400
Jetlore May 30, 2018
iZettle May 17, 2018 2,200
Swift Financial September 20, 2017 183
TIO Networks July 18, 2017 239
Xoom November 12, 2015 1,226
Modest August 19, 2015
Paydiant April 2, 2015 285
CyActive March 5, 2015 70
StackMob December 17, 2013
Braintree September 26, 2013 800 July 18, 2012
Fig Card April 28, 2011
Fraud Sciences January 30, 2008 169
VeriSign (Payment Gateway Business) December 31, 2005 370
Octasoft January 1, 2002 March 1, 2000
Source: Pitchbook

As people gradually abandon ATMs and bank branches, mobile payment companies are also winning some of the most important real estate in the digital economy. Square App, PayPal, and Venmo are among the most-downloaded finance apps in the US, according to data from App Annie.

And while cash is far from dead, it’s becoming a lot less popular in some geographies. Germans famously prefer to buy things using hard currency, but the Swedish have just about given up on notes and coins. In the UK, electronic debit card payments outnumbered those with physical money last year. Debit card payment volumes are projected to increase by more than any other payment method during the next decade, rising almost 50% to 19.7 billion payments.

These trends have been a powerful tailwind for fintech upstarts. Shares of Dutch payment-processor Adyen jumped more than 90% on their first day of trading, while those of Square have more than doubled in the past year. PayPal’s stock has soared more than 50% during that span.

John Detrixhe
Future of Finance Reporter
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