Its pending $2.2 billion acquisition of Sweden’s iZettle still awaits final approval, but that didn’t stop PayPal Holdings Inc. from announcing late Tuesday that it has a deal to buy payout provider Hyperwallet for $400 million in cash.
San Francisco-based Hyperwallet is an international specialist in provisioning payments, commissions, and royalties to drivers, recording artists, and other groups of independent workers, many of whom work on a short-term basis and are linked to firms that contract for their services via online platforms.
“E-commerce platforms and marketplaces are leveling the retail playing field by connecting buyers who have specific needs with groups of sellers that can meet them,” Bill Ready, chief operating officer of San Jose, Calif.-based PayPal, said in a news release. “Merchants and service providers who use these platforms want quick, efficient, flexible, and secure access to their earnings, whenever and wherever they need them. By acquiring Hyperwallet, we will strengthen our ability to provide an integrated end-to-end solution to help e-commerce platforms and marketplaces—however large or small—leverage world-class payout capabilities in over 200 markets.”
Through Hyperwallet, merchants using PayPal or its Braintree e-commerce services will gain localized, multicurrency payment-distribution capabilities with disbursement options to prepaid cards, bank accounts, debit cards, and cash pickup locations, as well as PayPal accounts, PayPal said.
“Combining Hyperwallet’s advanced payout capabilities with PayPal’s scale will bring increased value to both Hyperwallet’s and PayPal’s customers,” Hyperwallet chief executive Brent Warrington said in the release. “This is an outstanding opportunity to supercharge Hyperwallet’s growth and further our mission to pay the planet.”
In a research note, New York City-based investment firm Keefe, Bruyette & Woods analysts said the acquisition makes strategic sense for PayPal. “It will enhance the company’s ability to fund directly to multiple payment channels, which is something that [PayPal] is not able to do today,” the note says. “Presently, [PayPal] funds proceeds into customers’ PayPal accounts, and then those funds can be transferred elsewhere. This acquisition allows the company to be more flexible in directing cash flows, which would be advantageous when working with various merchants, including marketplaces and other exchanges.”
Payments analyst Thomas McCrohan of Mizuho Securities in New York said in a note that “Hyperwallet has several blue-chip accounts,” including travel site Expedia, vacation-rental site HomeAway, and online fashion and jewelry retailer Stella & Dot.
Last month, PayPal told analysts that its updated three-to-five-year capital plan calls for $1 billion to $3 billion in acquisitions per year.
PayPal said the Hyperwallet deal is subject to regulatory approvals and is expected to close in the fourth quarter. Also pending is PayPal’s announced acquisition of Stockholm-based payments provider iZettle AB, which serves 500,000 merchants in 11 markets. That deal is expected to close in the third quarter.