PayPal considers Xoom sale: report
- PayPal is exploring the possibility of selling its Xoom cross-border business, according to a report from the technology trade publication The Information, which cited an unnamed source for information.
- The digital payments company has hired the investment bank Goldman Sachs and has been working with it “on the sales process in recent months,” The Information reported late Tuesday.
- A spokesperson for San, Jose, California-based PayPal didn’t immediately respond to requests for comment on the possibility.
The Xoom business is a peer-to-peer payments tool that acts as a money transfer service that lets users send money to different countries. The cross-border realm of payments has mushroomed in recent years as migrants increasingly use such services to send money home to family and friends.
As technologies in the cross-border arena have advanced, so has the competition. Aside from the legacy players, including MoneyGram and Western Union, there are also new rivals in the arena, including Remitly and Euronet. PayPal partnered with Visa earlier this year to expand the Xoom service by making the cross-border debit deposit services available on a real-time basis via Visa debit cards in 25 countries.
The report about a possible sale of Xoom comes as PayPal is increasingly under pressure to jump-start growth at its flagship checkout business.
In its first-quarter earnings report this month, PayPal emphasized the growth of its unbranded business, including its Braintree card-processing services, but had less say about the growth of the branded business. That’s a concern for investors because the unbranded business tends to have lower profit margins than the branded segment.
The situation has also led to questions about the company’s plan to replace CEO Dan Schulman by the end of the year. Schulman said in February that he would leave, but there has been little information on the search since then. During an earnings call with analysts this month, Schulman said only that a board committee had been formed and a search firm had been hired.
In commenting on the planned departure of Schulman, one head-hunting firm executive said earlier this week that PayPal’s slow movement on the replacement could signal a pending transaction. “It would have me thinking, given the lack of transparency here, that something else is going on,” said Josh Crist, who is co-managing partner at the Chicago search firm Crist Kolder.