Why Its Deal for Poynt Means More Than Payment Terminals for Web Giant GoDaddy

GoDaddy Inc.’s agreement to buy Poynt Co., announced late Tuesday, will broaden GoDaddy’s focus into payment services for online merchants and could make the Web-services company a key player in merchant acquiring, observers and company executives say.

The deal, in which GoDaddy has agreed to pay $320 million in cash plus another $45 million in deferred cash payments over three years for Poynt, brings to the Scottsdale, Ariz.-based company, best known for domain registration and other services, a 7-year-old company whose point-of-sale devices and related services are processing more than $16 billion in yearly gross merchandise volume directly and through resellers. But GoDaddy’s top brass clearly intend to do more than manage POS transactions.

Half of GoDaddy’s commerce clients also operate physical stores, said chief executive Aman Bhutani during an investor call late Tuesday. That makes Poynt more attractive, he said, and not just because the Palo Alto, Calif.-based terminal company could serve those merchants. Poynt is also a payment facilitator, or payfac. That allows the company to sign more small sellers and piggyback them on Poynt’s merchant account. “We get customers asking all the time for seamless integration,” Bhutani said on the call. “They want online and offline together.” 

Poynt did not immediately respond to a request for comment about the acquisition, which is expected to close in the first quarter next year. The company was founded in 2013 by Osama Bedier, a former Google and PayPal executive who led the development of Google’s first mobile wallet.

Poynt also brings critical payments capabilities at a time when the Covid-19 pandemic is leading many merchants to shift sales from the physical point of sale to online commerce. That means the acquisition “gives us an entry point into payments and invoicing as well,” Bhutani said.

In that sense, the deal moves GoDaddy into a blended online-offline realm where companies like Square Inc. and Shopify Inc. operate, says Jared Drieling, senior director of consulting and market intelligence at The Strawhecker Group, an Omaha, Neb.-based consultancy. With Poynt, GoDaddy can offer a combination platter of physical-store and online commerce options, Drieling says.

“Bundled, integrated [payment] packages are a trend,” he says. “GoDaddy is trying to close that omnichannel gap.” With the deal for Poynt, he adds, “GoDaddy has the Web site tools, and now they have the payment processing capability.”

GoDaddy, which serves some 20 million clients worldwide  for its Web services, is taking a long-term view toward payments. Top executives on the call said they expect to spend next year on integration of Poynt’s capabilities, with the full benefit of the acquisition arriving in 2023. “Our initial focus will be to support our customers in the United States, Canada, India, and Australia,” Bhutani told equity analysts during the call. “We want to reduce the friction between offline and online [commerce]. That’s why Poynt is so interesting to us.”