GlobalData Plc

PayPal targets bill payments and underserved through TIO acquisition

PayPal recently acquired Canada-based bill payment firm TIO, aiming to develop its customer value proposition and extend its market reach through access to the global underserved.

PayPal has announced that it will acquire TIO Networks for C$304m (US$233m) and upon closing of the acquisition, TIO will operate as an integrated service within PayPal. While speaking about the expected strategic benefits of the acquisition, Hamed Shahbazi, chairman and CEO of TIO, confirmed that the company’s mission harmonizes with PayPal’s vision to democratize 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 US$7bn in customer bill payments in fiscal year 2016 and serves 14 million customer bill payment accounts. The company has more than 10,000 billion partners, including some of the largest telecom, wireless, cable, and utility companies, enabling it to efficiently process bill payments for its customers.

As the acquisition is expected to 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. With bill payments increasingly moving into the digital space, the acquisition will help PayPal extend its value proposition by providing TIO’s service to PayPal’s customers within its online and mobile product portfolio.

Since many of TIO’s services specifically target the underserved segment, the acquisition could be an even larger market opportunity for PayPal to serve more than 33 million US households, and 2 billion people globally. The underserved segment has traditionally been difficult for PayPal to access, since its accounts are largely funded by bank accounts or payment cards. As a result, accessing the underserved segment will significantly extend PayPal’s customer reach while also providing an efficient tool to compete with banks for serving this growing global population.

By Nicolae Bacila, Consumer Payments Analyst

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