On September 13, 2019, a customer used a SumUp payment card reader in Lisbon, Portugal.
Angel Garcia | Bloomberg via Getty Images
London-UK-based payment processor SumUp acquired marketing startup Fivestars to expand its influence in the United States and compete with giants such as PayPal and Square.
The company said on Thursday that it will acquire Fivestars for US$317 million in cash and stock. San Francisco-based Fivestars helps merchants set up reward programs and promotions for customers.
Founded in 2012, SumUp is known for its small credit card readers that allow small businesses to accept payments. The company also provides other payment tools, including businesses that can open their own online stores. It has more than 3 million merchants signed up in Europe, the United States and Latin America.
SumUp competes with Sweden’s iZettle and Jack Dorsey’s Square, which were acquired by PayPal in 2018. As the startup plans to expand in the United States, competition with these large companies is bound to intensify. But SumUp believes that there is enough room for many different companies to coexist.
Andrew Helms, managing director of SumUp USA, told CNBC: “I want to say that what we really focus on and what we are good at is the smallest merchant.” “We are not going to enter the enterprise, and we are not going to be more upstream.”
Helms said that during the coronavirus pandemic, spending patterns in the US market have changed, and the growth of payment methods such as non-physical transactions, invoices and payment links has increased.
However, he added that “we may have underestimated the shift back to physical stores and physical stores” because the Covid restriction was lifted and people met face to face again.
According to data from Crunchbase, before the deal with SumUp, Fivestars raised a total of 115 million U.S. dollars and won the support of investors including Lightspeed Venture Partners and Menlo Ventures.
At the same time, SumUp has raised a total of US$1.4 billion in equity and debt financing since its establishment. The company is supported by companies such as Goldman Sachs, Singapore Temasek and Bain Capital.