Understanding Paypal’s Acquisition Of Xoom

Paypal took a leap forward in digital money transfer business when Paypal acquired Xoom which is one of the major players in the market. When excluded Xoom’s cash and short-term investment then Paypal paid $25 per share in cash to acquire Xoom Including Xoom’s debt paypal spent around 1.09 billion dollars to acquire the company and when Paypal did acquire Xoom, Paypal’s customer service was busy confirming the merger with its customers

In the global money transfer market Xoom was one of the upstarts to come in way of traditional money transfer like Western Union. The remittance market is valued at around 600 billion US dollars by the world bank Usual global money transfer services which are frequently used by immigrants to send money to family or friends in their home, are cash based and also money agents in retail locations are used to make transfers abroad.

Understanding Paypal’s Acquisition Of Xoom

But the global remittance scenario changed drastically with upstart of Xoom and other related companies. Xoom let people wire money through internet at convenience of people. They could now send money from PCs and mobile phones.The company transacts around 7 billion dollars in payments every year and presently lets people to send money from the United States to 37 countries.

Xoom merged with Paypal in a hope to spread globally. Xoom wanted to take take advantage of the fact that Paypal is present globally. Paypal’s knowhow and relationship with various banks spread across continents seemed to be motivation for the merger. Mr. John Kunze the CEO of Xoom is quoted as saying “You can imagine us getting a global footprint much faster and with much less execution risk”

India, Latin America and Philippines seem to be the biggest fund receivers through the use of Xoom and exactly 60 percent of its customers send payments from mobile phones.

Many eBay users use Paypal Payment system In the United States  to make payments and complete transactions. With the rise of many payment processing startups like Stripe and square Paypal has got sizable competition and thus Paypal is forced to hunt for new domains in which it can continue to expand its business.

Paypal had split apart from Ebay to have a healthy growth rate in new areas. Although eBay has caused its initial growth but now the time had come to split apart and look for new growth opportunity. There have been speculations that eBay’s ownership had resulted in other big businesses to rely greatly on Paypal which started in the 1990s

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