A customer uses a SumUp payment card reader in Lisbon, Portugal on September 13, 2019.
Angel Garcia | Bloomberg via Getty Images
LONDON – SumUp, a UK-based payment processor, has acquired marketing startup Fivestars to expand its reach in the US to take on giants like PayPal and Square.
The company announced Thursday that it was buying Fivestars for $ 317 million in a mix of cash and stocks. Fivestars, headquartered in San Francisco, helps merchants set up rewards programs and promotions for customers. The deal gives SumUp access to Fivestar’s 12,000 customers and generates annual sales of $ 3 billion.
Founded in 2012, SumUp is best known for its mobile credit card readers that allow small businesses to accept payments. The company also offers other payment tools, including the ability for merchants to set up their own online shops. It has registered over 3 million dealers in Europe, the US and Latin America.
SumUp competes with Sweden’s iZettle, which was acquired by PayPal in 2018, as well as Jack Dorsey’s Square. As the start-up plans to expand in the US, the rivalry with these big players will intensify. However, SumUp believes there is ample room for a number of different companies to coexist.
“I would say that we really focus on the smallest retailers and we set ourselves apart,” Andrew Helms, US managing director at SumUp, told CNBC. “We don’t want to get into companies, we’re not going any further upstream.”
Helms said the U.S. market saw a shift in spending patterns during the coronavirus pandemic, with payment options such as non-physical transactions, invoicing and payment links seeing accelerated growth.
“However, we are likely to underestimate the shift back to shops and stationary facilities” as Covid restrictions are lifted and people meet again in person, he added.
Prior to the deal with SumUp, Fivestars had raised a total of $ 115 million, according to Crunchbase, and had the support of investors like Lightspeed Venture Partners and Menlo Ventures.
SumUp has raised a total of $ 1.4 billion in equity and debt financing since its inception. The company is backed by Goldman Sachs, Singapore-based Temasek and Bain Capital.