PayPal Holdings Acquisition of Hyperwallet For $400 Million Strengthens Merchant-Facing Platforms

PayPal Holdings (PYPL) said on Tuesday that it would acquire payment services company Hyperwallet for $400 million, which will help strengthen its merchant-facing platform.

Hyperwallet is an 18-year-old payment services firm that can process payments in more than 200 countries globally using debit cards, PayPal or bank transfers.

“Combined with recently acquired iZettle, (the acquisition) also enhances the company’s ongoing monetization efforts,” Wedbush analyst Moshe Katri said in a note to clients. “Strategically, both acquisitions place PayPal at par competitively with Square (SQ) and Adyen.”

Katri said he recently placed PayPal on his best-ideas list as he expects a continued push for monetization on both the consumer- and merchant-facing sides. The company has the potential to expand margins and accelerate revenue growth, he said. Even after multiple acquisitions since the start of the year, PayPal sill has more than $10 billion in its “war chest.”

The purchase of Hyperwallet is expected to close in the fourth quarter and provides PayPal with about 19 million merchants with localized, multi-currency payment capabilities, Katri said.

“The transaction will also strengthen Paypal’s ability to provide an integrated end-to-end solution to help large and small e-commerce platforms and marketplaces leverage world-class payout capabilities in over 200 markets,” he said. “Hyperwallet’s capabilities should help PayPal catch up with Adyen, (which) still has an advantage given its European banking license.”