Market Insight

PayPal acquires TIO for $233 million to expand payments offerings

February 20, 2017

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PayPal has acquired TIO Networks for $233 million. TIO Networks is a utility billing network operator in North America that offers bill payment services to 14 million customers through its 65,000 retail.

Our analysis


Bill payment would expand PayPal’s existing business model

PayPal reported 197 million active customer accounts in Q4 2016, with nearly 1.8 billion transactions at a total value of $99.35 billion. The acquisition of TIO will allow PayPal to reach TIO’s 14 million bill payers and leverage TIO’s bill payment network formed of 10 thousand billing entities in North America. There is no specific integration plan as yet, but PayPal is aiming to make bill payments as simple as its online and P2P payments services. 

TIO processed 60 million transactions in its fiscal year 2016. While there will be revenue benefits form TIO’s existing billing business, the value for PayPal will more likely come from integrating its service to complement its existing solutions, drive engagement and expand its physical retail footprint.

If PayPal integrates TIO’s bill payment solutions, adding bill payment would complement PayPal’s payments offerings and potentially extend its existing customer base. In addition to similar online and mobile payments solutions, TIO’s retail Agent Network solution will help PayPal to reach unbanked customers, while offering an additional payment method to the existing banked users. PayPal also launched PayPal Cash in 2015 to allow users to add cash to their PayPal accounts in the US. By the end of 2016, there were 8,000 7-eleven stores in the US supporting PayPal Cash. This indicates PayPal is expanding to target the unbanked through agent networks and incorporating cash transactions into its digital platform. Supporting such users will not be a huge revenue driver because of the nature of the target users, but it does extend PayPal’s reach and convert more users to digital platforms.

PayPal must strategically develop partnerships to deal with competition

PayPal has had eight major acquisitions since 2013 to expand its service availability and compete in the global market. These include the acquisitions of Braintree for $880 million to allow in-app payments such as Uber and Airbnb, the mobile wallet platform Paydiant for $280 million, and the digital money transfer company Xoom for $890 million.

PayPal has increased its footprint for its online, P2P and mobile payments solutions: there are 201 countries currently supporting PayPal Express Checkout and other types of PayPal payments.  The wide global footprint also means fierce competition from other international and local payments players. Therefore, PayPal must strategically develop its partnerships to strengthen and innovate with its existing offerings.  

Research by Market
Mobile & Telecom
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