Thursday , March 28, 2024

The U.K.’s SumUp Busts Into the U.S. Acquiring Market With Its Deal for Fivestars

In a deal that could have important implications for payments providers like Square Inc. and Stripe Inc., the United Kingdom’s SumUp Inc. early Thursday announced it has acquired Fivestars Loyalty Inc., a San Francisco-based payment facilitator for some 12,000 small businesses.

The acquisition, SumUp’s first in the U.S. market, calls for the London-based company to pay $317 million in cash and stock for 11-year-old Fivestars, which also operates as a loyalty-marketing provider with more than 70 million consumers as members. The company’s technology processes $3 billion in volume on 100 million transactions annually, according to information released Thursday by SumUp.

“Now is the time to make sure our presence is as strong in the U.S. as it is in Europe, and, by acquiring Fivestars, SumUp will deliver for U.S.-based merchants as it has in other international markets,” said Marc-Alexander Christ, SumUp’s  co-founder, in a statement.

A contactless transaction made using a SumUp reader.

With the deal for Fivestars, SumUp not only enters the U.S. market for merchant processing but also adds a key player in payment facilitation and integrated payments, both important trends in the acquiring business. Payfacs sign merchants for payment processing by offering the service on the payfac’s own merchant account, typically through business software developed by the payfac itself. The model, followed by companies like Square, is at least a decade old and has been gaining widespread popularity with processors.

Now, with SumUp’s entry in the U.S. market, the trend has gained an important new player as merchants look to payments processors to help them recover from complications caused by the Covid pandemic. Both online and in-store payments technology has played an important role in aiding small merchants that were confronted in the early days of the pandemic with lockdowns and other restrictions that drove customers to use e-commerce and contactless transactions.

Founded in 2010, SumUp operates in 34 markets globally and processes for some 3 million merchants.

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