PayPal Selling Xoom: Strategic Shifts and Market Implications

PayPal Selling Xoom: Strategic Shifts and Market Implications

Written by Alison Lurie, In Business, Published On
April 26, 2024

In Short

  • A computer trade magazine called The Information said that PayPal might sell its Xoom cross-border business, but the source of this information was not known.
  • According to a story from The Information late Tuesday, “On the sales process in recent months,” Goldman Sachs has been working with the digital payments business.
  • A PayPal employee in San Jose, California, did not answer the phone right away when asked for comment on the subject.

PayPal is said to be considering Selling Xoom, its foreign money transfer service. This is part of a much bigger plan to shake up the digital payments business. Recent changes in ownership and a reevaluation of the company’s main goals may have affected this choice, which shows that PayPal is changing its strategy. This piece goes into more detail about the possible sale, including the facts, the reasons behind it, and how it will affect the market and customers in general.

What Do You Mean By The PayPal Selling Xoom

Through peer-to-peer exchanges, Xoom makes it easy to send money between countries. More and more people are using cross-border payment methods to send money back home as they move. This has caused this business to grow quickly. With the fast growth of related technologies, competition has stepped up in the cross-border field. MoneyGram and Western Union, which have been around for a long time, fight with new companies like Remitly and Euronet. Thanks to a deal between PayPal and Visa early this year, Visa debit cards can now be used to make cross-border bank deposits through Xoom in 25 countries. There is a lot of talk about Xoom being sold at the same time that PayPal is under more and more pressure to speed up growth at its main checkout service.

PayPal posted its earnings report for the first quarter earlier this month. The company focused on growing its unbranded business, which includes its Braintree card-processing services. It gave fewer details about how its branded business was growing. This is a fear for investors because branded businesses usually make more money than unbranded ones. Due to the situation, there are also worries about the company’s plan to find a replacement for Dan Schulman by the end of the year. Since Schulman said he was leaving in February, there hasn’t been much news about the search. During this month’s call with analysts to discuss the findings, Schulman only talked about the creation of a board committee and the hiring of a search firm.

An executive from a headhunting firm said earlier this week that PayPal’s slow work on the replacement could mean that the company is about to sell because Schulman is leaving. “Because nothing is clear here, it makes me think that something else is going on,” said Josh Crist, co-managing partner at the Chicago search company Crist Kolder.

The History of PayPal Selling Xoom

In 2015, PayPal paid about $890 million to PayPal Selling Xoom. The company was known for making it easy to send money, pay bills, and add money to mobile phones from the US to 131 countries around the world. eBay bought this company to give it an edge in the foreign money transfer market, where it competes with banks and fintech companies.

Even though PayPal did well at first with integration and service growth, it’s clear that it has stopped focusing on Xoom in recent years. Reports say that PayPal has greatly cut back on advertising for Xoom and has also cut down on how often the service is talked about during earnings calls. Xoom used to be an important part of PayPal’s growth plan, but recently there have been fewer attempts to promote the platform and slower growth in new countries, which suggests a shift in strategic priorities.

A Business Plan for the Purchase

A company called Elliott Management got a big piece of PayPal in 2022. This could cause Xoom to be sold. Because of this change, PayPal may have focused more on what it does best, like its main platform and the Venmo service, which make it easier for people to send and receive money. It’s possible that PayPal Selling Xoom handles more payments, but compared to other services, it doesn’t seem to be very important to the company’s finances. The choice to think about selling Xoom may have been influenced by PayPal’s poor performance and the pressures from fintech companies like Wise and Remitly, which are growing quickly.

What This Means for Companies That Send Money

If Xoom is sold, there could be a big change in how the international money transfer game is fought. The company Xoom could be given a new owner who makes strategic partnerships and investments in certain areas. This would make it a better competitor in the market. Alternatively, if PayPal decides not to get involved in money transfers directly, it could be good for other businesses because there will be less competition. Established financial services companies that want to add more digital products to their lineup or new fintech companies that want to quickly grow their businesses could both be interested in buying Xoom. Different banks may use the results of this transaction to show how they plan to handle foreign money transfers and digital payments in the future.

To sum up

The money transfer and financial services industries are at a changing point. PayPal’s plan to sell Xoom is a big change for both of these industries. The future of sending money and managing money on a global level will depend on the strategic moves made by market leaders like PayPal. This is because digital payments are becoming more common in both international trade and people’s personal funds. People who might invest or have a stake in the financial technology business are keeping a close eye on the situation and thinking about what will happen to the industry as a whole with this huge sale.


What is Xoom, and why is PayPal Selling Xoom?

PayPal acquired Xoom in 2015 and now lets clients send and receive money, pay bills, and top up mobile phones worldwide. According to reports, PayPal may sell Xoom to focus on its main payment platform and Venmo. New ownership dynamics and a reassessment of the company’s strategic goals may influence this decision.

Who is PayPal consulting regarding the Xoom sale?

To sell Xoom, PayPal hired Goldman Sachs. The involvement of a major financial institution demonstrates that PayPal is serious about selling

How significant is Xoom to PayPal’s operations?

Although it increases PayPal’s payment volume, Xoom is a modest part of its company. Recent advertising and earnings calls have been scarce for the company.

How might Elliott Management affect PayPal’s Xoom sale?

Elliott Management may be influencing PayPal’s strategic decisions, such as the Xoom transaction. Elliott Management bought a lot of PayPal in 2022. They usually want to enhance earnings. Thus, they may try to encourage you to sell some of your less profitable businesses so you can focus on the profitable ones.

What might Xoom’s sale mean for the market?

If Xoom is sold, international remittance competition could change drastically. A new owner can revitalise the service and even increase its market position by making strategic investments. If PayPal departs the remittance sector, other players may benefit from decreased competition. The findings should attract established financial institutions and fintech firms looking to expand their digital product offerings.

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