PayPal has concluded its acquisition of Vancouver-based direct bill payment company TIO Networks, giving the online financial services giant new inroads for reaching lower income customers around the world. The deal sees PayPal buy all outstanding TIO shares for $3.35 per share in cash, amounting to a $302-million total.
Recently, PayPal CEO Dan Schulman sat down with TIO Networks founder, Hamed Shahbazi, to talk about their shared vision.
“One of the reasons that we became very interested in the coming together of our capabilities was about the brand promise that [TIO Networks] has, your mission,” said Schulman in a video posted on his Facebook page. “But it’s also about the scale, how many billers you accept right now, the number of merchants and people that are directly working with you online.”
Schulman says that TIO’s capabilities to work with low- to moderate-income customers currently underserved by the traditional banking system was the key. “One of the most important things that we’re trying to do here at PayPal is democratize financial services,” says Schulman. “For many people across the world, they’re underserved by the traditional financial services industry. They have to go to cheque cashing agencies to cash a cheque or to a money order location to pay a bill or they have to travel to locations to pay bills … It’s expensive to be poor.”
Shahbazi, who will stay on to oversee his team’s operations within the PayPal organization, says that joining PayPal is about making a larger impact. He says the company processed $7 billion in transactions in 2016, representing between 75 and 80 million bill payments.
“When you start thinking about the capabilities that PayPal has on the risk side, on the credit side, and you start marrying that with fundamental payment obligations and last-minute payments that we have, I think you can do some very special things,” says Shahbazi.
“Our billers are now going to have access to lower processing costs and more channel capabilities outside of the bank channel,” says Shahbazi. “And our walkup bill payment network is going to have more products and services, as we’ll have more resources.”
Shahbazi says he welcomes the opportunity to fit within the larger organization. “One of the things that surprised me about PayPal was about how agile a big company can be,” says Shahbazi. “What I’ve found with PayPal’s culture is that when the chips are down and you need to act, people can be very fast, very responsive.”
As to the role that TIO will play in helping to chart PayPal’s future, Schulman spoke of the fundamental shift currently underway in financial services and how technology is the key driver. “There’s no underestimating how impactful the proliferation of mobile and smartphones has been,” says Schulman. “You have in the palm of your hand all the power of a bank branch.”
“I think over the next five years, you’re going to see more change in the financial system than we’ve seen in the last 30,” says Schulman. “I’m very optimistic about what that can do for consumers, for small businesses, in truly democratizing financial services.”