Going old school, PayPal Inc. said Tuesday it will acquire TIO Networks Corp., a financial services company that facilitates bill payments in offline locations.
PayPal will pay $233 million in cash for the company. Founded in 1997, TIO is a bill payment processor that allows users to pay bills from utility, telecom and cable company kiosks, retail walk-in locations, mobile apps and its website.
The company said it processed more than $7 billion in consumer bill payments for 14 million customers in 2016 from 900 self-service kiosks and 65,000 walk-in locations. TIO also works with 10,000 biller partners to provide a cloud-based Transaction Processing System that integrates into billing software to allow seamless payment processing when a user makes a payment at a TIO-supported payment point.
PayPal’s acquisition of a physical-world billing company may seem slightly left of center, but the company claims that TIO supports its vision of democratizing money by giving consumers more convenient and affordable ways to pay their bills, especially people underserved by traditional banking and credit card companies.
The numbers of those underserved is remarkable, said PayPal Chief Executive Officer Dan Schulman, who noted that more than 2 billion people worldwide do not have affordable access to basic financial services. that makes it difficult and expensive for thems to carry out basic financial tasks, including bill payment. Acquiring TIO enables PayPal to reach more consumers who would traditionally not use its services.
PayPal said it plans to introduce TIO’s cash-based users to more of PayPal’s digital services eventually, assisting the company to grow its active user base from nearly 200 million today.
Coming into the deal TIO had a market cap on the Toronto Stock Exchange of $208.96 million. The deal valued the company at a premium of 25 percent to TIO’s 90-trading day volume weighted average price as of Feb. 13. The acquisition is expected to close in the second half of 2017.