U.K. based payment processor buys U.S. startup to compete with PayPal and Square



In a reverse trend, U.K. based payment processor SumUp had bought U.S. marketing startup Fivestar. This is the first acquisition of the European company overseas. It has acquired the startup to have a deeper impact in the U.S. markets as its presence in the nation has been modest in the past two years.

On Thursday, Sumup released a statement saying that it would pay $317 million as both cash and stocks for the startup. In October 2020, Fivestar was valued at $285 million.

Sumup was founded in 2012 and is based in London. It was considered to be one of the many clones to come out of Europe after Square set up base in U.S. and had not expanded overseas. Its main product is mobile credit card readers which let small businesses accept payments. It also provides allied services such as helping merchants to build their own online stores. Over three million merchants in Europe, Latin America and the U.S. have signed on with Sumup.

Fivestar is a popular product with small merchants. It helps them to set up rewards and promotion schemes for customers. The San Francisco company said that it drives over $3 billion in sales. It also sees about 100 million transactions per year and Sumup would like to leverage this and build its relationship with merchants and get them to sign up with Sumup’s card readers.

Currently the Fivestar brand will stay and work will continue to integrate its product with its parent Sumup. Co-founder Victor Ho will remain with the company. TechCrunch reported that Ho said that they founded Fivestar in order to help small businesses grow and expand their footprints in the digital economy and they had achieved that goal. He said that their partnership with Sumup would support “a retail market that champions small business success.”

Sumup is set to make a mark and catch up with competition including PayPal and Square. However, Andrew Helms, U.S. managing director told CNBC that they “focus and excel” on who could be called “the smallest merchants” and that they were not looking to move into “enterprise” or to go “more upstream.”

 


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