Earlier this week, PayPal Holdings Inc. agreed to acquire financial–technology company Hyperwallet Systems Inc. for about $400 million, a deal that augments its offerings to businesses for managing and processing their online and mobile payments.
Founded in 2000, Hyperwallet helps individuals and small firms receive payments for goods and services that they sell on online marketplaces. The company, which counts private-equity firm Primus Capital Partners as a major shareholder, can disburse payments in more than 200 countries through a variety of forms, including debit cards and transfers into bank or PayPal accounts.
PayPal executives have previously identified both deal-making and supporting commerce that happens over online marketplaces as two of the company’s biggest drivers of growth in coming years. Although its shares are up 60 percent over the past year and its market capitalization recently topped $100 billion, PayPal is facing increased competition from banks, startups and established tech companies like Amazon and Apple Inc.
In May, the San Jose, Calif.-based company agreed to buy European payment-terminal maker iZettle AB for roughly $2.2 billion, the largest acquisition in PayPal’s nearly 20-year history. At an investor day shortly after the deal was announced, John Rainey, PayPal’s chief financial officer, laid out plans to spend between $1 billion and $3 billion annually on acquisitions.
PayPal already manages payments for some of the largest online marketplaces, including Uber Technologies Inc. and Airbnb Inc., through its Braintree unit, and executives hope that acquiring Hyperwallet will make it more attractive to prospective customers. Around half of global online retail sales occurred on marketplaces in 2017, according to Internet Retailer, a trade magazine.
“We see an explosion of marketplaces,” said Bill Ready, PayPal’s chief operating officer, in an interview. “We want to serve them with a full operating system for commerce.”
Hyperwallet Chief Executive Brent Warrington and around 300 employees will join PayPal’s ranks after the deal closes. Warrington said in a news release that selling to PayPal was an “outstanding opportunity to supercharge Hyperwallet’s growth.”
Many of PayPal’s competitors are also angling to do more business for marketplaces. Adyen NV, which listed its shares in Amsterdam last week, handles payments for online crafts marketplace Etsy Inc. and online travel company Booking Holdings Inc. Earlier this year, Adyen won a bid to become the primary payments processor for eBay Inc., PayPal’s former parent company and one of its biggest sources of customers.
Ready said that what distinguishes PayPal from other payments companies that cater to marketplaces is that it can connect those businesses to the more than 200 million consumers globally who have PayPal accounts.
“The thing we uniquely do that no one else is doing is bringing both buyers and sellers to the equation,” Ready said.