Shares of Xoom, the provider of digital money transfers, are zooming about 22 percent higher to $25.29 this morning, a day after PayPal said it is buying the San Francisco company for $890 million.
The purchase would give San Jose-based PayPal, which is splitting from eBay this month, an edge in global money transfers. Xoom is like the Western Union of the Internet age: It lets U.S. users send money or pay bills in 37 countries around the world via a mobile app or on the Web.
Xoom was co-founded by early PayPal investor Kevin Hartz in 2001. He told the Mercury News, when the company went public in 2013, that his experience watching PayPal get off the ground didn t prepare him for all the regulatory issues involved in running a company in the financial industry. Xoom CEO John Kunze, who succeeded Hartz as CEO in 2006, told the New York Times Wednesday his company would benefit from PayPal s banking know-how and relationships in other countries. Hartz remains on Xoom s board.
The value of global remittances this year is expected to reach $440 billion, according to the World Bank, which also said last month that the costs of sending remittances around the world have fallen.
PayPal s purchase of Xoom would also differentiate it in a growing digital payments market that companies such as Apple, Google and Samsung are entering, said Gilles Ubaghs, senior analyst for financial services technology at Ovum, in a note.
Quartz points out that PayPal has been stepping up its shopping: Earlier this year, it bought Paydiant, which makes mobile-wallet tech for merchant loyalty programs. And in 2013, it bought Braintree, provider of payments and transaction tech, for $800 million.
Photo from Associated Press archives
