A customer uses a SumUp payment card reader in Lisbon, Portugal, September 13, 2019.
Angel Garcia | Bloomberg via Getty Images
LONDON – SumUp, a UK-based payment processor, has acquired marketing start-up Fivestars with the aim of expanding its reach in the US and taking on giants like PayPal and Square.
The company said Thursday it was buying Fivestars for $ 317 million in cash and shares. Fivestars, headquartered in San Francisco, helps merchants set up rewards programs and promotions for customers.
Founded in 2012, SumUp is best known for its small credit card readers which allow small businesses to accept payments. The company also offers other payment tools, including the ability for merchants to set up their own online stores. It has over 3 million registered merchants in Europe, the United States and Latin America.
SumUp competes with Swedish iZettle, acquired by PayPal in 2018, as well as Jack Dorsey’s Square. As the start-up plans an expansion in the United States, the rivalry with these big players is expected to intensify. But SumUp believes there is enough room for a number of different companies to coexist.
“I would say that we really focus and excel at the smaller traders,” Andrew Helms, US managing director of SumUp, told CNBC. “We are not looking to get into the business, we are not going further upstream.”
Helms said the U.S. market has seen a shift in spending habits during the coronavirus pandemic, with payment options such as non-physical transactions, billing, and payment links experiencing increased growth.
However, “we are probably underestimating the return to the store and the brick and mortar” as the Covid restrictions are lifted and people meet in person again, he added.
Prior to the deal with SumUp, Fivestars had raised a total of $ 115 million and secured backing from investors such as Lightspeed Venture Partners and Menlo Ventures, according to Crunchbase.
SumUp, meanwhile, has raised a total of $ 1.4 billion in equity and debt financing since its inception. The company was backed by Goldman Sachs, Temasek of Singapore and Bain Capital.