PayPal acquires TIO in bill pay push (PYPL)

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February 16, 2017 4:28 PM

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PayPal announced late Tuesday that it plans to acquire the Canada-based bill payment firm TIO Networks, which serves as a major player in the North American bill pay market, for $232 million.

Following the acquisition, which is expected to close in the second half of this year, TIO will operate as a company within PayPal.

The acquisition is likely part of PayPal’s wider strategy to become an omnipresent player in consumers’ full financial lives.

TIO’s size and reach could help PayPal push into bill pay, which is likely a valuable play for the company.

But the firm’s offerings could also help PayPal attract a new segment of customers. The move likely isn’t a revenue play for PayPal, at least in the short term. Rather, it’s likely part of a bigger push to help PayPal continue to grow as it focuses on playing a role in a wider variety of day-to-day financial processes. TIO can provide convenient bill pay offerings to existing PayPal customers, therefore tying them more tightly to the product, especially as online bill pay becomes more popular.

But more interestingly, many of TIO’s services are likely targeted at un- or underbanked consumers, a massive population that PayPal likely historically struggled to access, since PayPal accounts are often funded by a bank account or card. By targeting this group — 33.5 million US households, and 2 billion people worldwide, for a sense of scale — PayPal could bring a new group of users into its ecosystem and more effectively undercut banks.

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