PayPal’s goal of translating its online success to mobile markets makes another leap forward as it announces its acquisition of the Wellesley, MA payments startup Paydiant. While it isn’t necessarily a household name, Paydiant has supported white-labeled, mobile wallet solutions and loyalty programs for companies like Subway, Harris Teeter, and Capital One since it’s inception in 2010. Even more notable than its individual merchant clients is the Merchant Customer Exchange (MCX), the merchant network behind the development of CurrentC.
Recent strives by technology and payments companies like Apple, Google, Samsung, and PayPal sparked the creation of MCXs CurrentC. With this merchant operated mobile wallet, companies like CVS, Walmart, and Target hope to maintain a competitive landscape in payments services so as to ensure the stability of their own organizations while providing additional means for their clients to pay for goods both smarter and faster.
In a recent interview with Fortune magazine, North Bridge’s Jim Moran made the following statement in regards to the reasoning behind Paydiant’s buyout:
“The reality is that mobile payments is still a zero billion dollar industry. While we had very big contracts with some very big merchants, the actual dollar values and volumes were just kicking in. And then you have what Apple is doing, which shined a big light on what we were doing but it caused a lot of boards to stutter-step on mobile payments. Apple’s solution is very simple and requires NFC-capable point-of-sale systems which aren’t very common yet, but they do have hundreds of millions of loyal customers and great phone. Plus, they’re Apple and they could buy a small country.So we mapped the capital requirements against time and projected volume — which equates the the revenue register ringing for us — and we felt the partnership with PayPal made a lot of sense. Particularly since its incoming CEO, Dan Schulman, knew us from his time at American Express AMEX and that our platform is industrial strength. He wants this to become a very big division of PayPal, and the [Paydiant] team was all on board… When a team tells you it’s time, it’s not my place to say it isn’t.Jim Moran, General Partner at North Bridge Venture & Growth Equity Partners
PayPal recently announced that it would be separating from it’s e-commerce parent eBay later this year, and it’s acquisition of Paydiant falls directly in line with PayPal’s ambitious goals of dominating payments as a whole. Over the past 5 years, Paydiant has raised $35 million in venture funding with its most recent Series C round valuing the company at $117 million. Re/code has stated the acquisition amounts to roughly $280 million yielding hefty and quick returns on VC investments.