Brigida Soriano - Fotolia
PayPal is acquiring digital money transfer firm Xoom for nearly $900m as it prepares its rebirth as a separate company when it splits from eBay this month.
Ebay’s decision to spin off PayPal – announced in September 2014 – enabled each of the two to focus separately on growth and suggested that PayPal had its own ambitions.
PayPal has already started to navigate its own future after it recently acquired Paydiant, which sells mobile payment software to retailers, for $280m.
Tech firms and banks are watching the financial technology space closely to ensure they are well positioned for changing customer demands being driven by digital technology.
Due to the onset of digital banking, technology companies are increasingly seen as genuine competition to banks and other traditional financial services providers. PayPal has a large customer base, trusted technology and capital resources, as well as space to grow.
Xoom allows consumers to send money, pay bills and reload mobile phones from the United States to 33 countries, including China, India, Mexico and the Philippines.
PayPal president Dan Schulman told Reuters: "Our aim is to bring the companies together to make it a true consumer champion in remittances."
Xoom will operate as a separate service within PayPal, Reuters reports.
PayPal is part of a trend seeing IT companies increase their presence in the financial services sector. The announcement that it would become a separate company making its own strategic decisions demonstrated that payments was a good place to be.
Schulman said recently that software is eating into the financial services sector and PayPal is at the centre of this. Due to the rise of digital banking, technology companies are increasingly seen as genuine competition to banks and other traditional financial services providers.