PayPal acquires Paydiant to expand reach to merchants

Paydiant helps retailers, including Subway, Walmart and Target, to create their own wallet apps

I swear that I have been hearing for years about the emerging payments space, and all of these companies that were going to get rid of the wallet forever (I still do not believe that will ever truly come to pass). It wasn't until the launch of Apple Pay last year, though, that it really started taking off.

That announcement seems to have lit a fire under the space and has made it more competitive than ever. Google recently took a big step, teaming up with carriers to pre-install Wallet, and now PayPal is also making an important move to go up against its newest and likely most formidable competitor.

PayPal announced on Monday that it has acquired Paydient, a mobile payment platform that allows enables merchants and banks to deploy their own secure mobile wallet solutions under their own brands, in their own apps.

No financial terms of the deal were disclosed, though Re/Code has pegged the pricetag at $280 million. A PayPal spokesperson declined to confirm that number to VatorNews.

Paydiant allows merchants to create their own in-app payment apps. It's white label Mobile Wallet platform includes mobile payments, loyalty, offers, ATM cash access and related commerce services. The service is used by merchants such as Subway, CapitalOne, Harris Teeter and Pulse. It also provides the mobile wallet platform for Merchant Customer Exchange, or MCX, which is looking to develop its own mobile wallet called CurrentC.

Some of the retailers in the MCX include Walmart, Target, Sears, Wendy's, Exxon and CVS, so this purchase will help PayPal expand its reach to retailers in a big, big way.

"With the addition of Paydiant, PayPal becomes an even stronger business partner for merchants. Using Paydiant’s platform, our merchant partners can now create their own branded wallets to accelerate mobile-in-store payments and drive consumer engagement through mobile payments, loyalty, offers and the prioritization of preferred payment types, such as store branded credit cards and gift cards," the company wrote.

"Similar to PayPal, Paydiant’s technology agnostic approach means that merchants can use any mobile payment technology – QR codes or NFC – that best suits their business."

For Paydiant, the company now has the opportunity to scale at a rate much faster than it would have on its own, given PayPal's longer reach.

"By joining the PayPal family, Paydiant will be able to scale our white label wallet platform and offer value-added benefits to our customers that only a combination of our two companies can provide – world-class risk management, 24 x 7 customer support, loyalty programs and mobile offers, an open payments architecture that supports all mobile operating systems and global reach into more than 200 markets and 162 million active digital wallets," Paydiant wrote in its own blog post.

"PayPal’s resources will enable us to push the boundaries of innovation for our retail and banking customers."

What will happen to Paydiant now is not entirely clear. PayPal says that it is acquiring the company's technology, and is also getting its team, but does not specify if that means that it will retain the Paydiant brand. 

Paydiant was equally as cagey, saying, "In the coming weeks, we’re looking forward to sharing more details with all of our customers, partners and prospects." 

PayPal would, again, not comment further on the deal, while Paydiant did not respond to Vator's request for comment.

The acquisition of Paydiant is subject to customary closing conditions, including regulatory approvals, and is expected to close in late March or April of this year.

Founded in 2010, Paydiant has raised around $35 million in funding, most recently raising a $15 million round in September of 2013. Investors in the company included North Bridge Venture Partners, General Catalyst Partners and Stage 1 Ventures.

(Image source: paydiant.com)