SumUp Acquires FiveStars: Expanding POS Services with Loyalty

SumUp Expands U.S. Presence with Fivestars Acquisition

SumUp, a European provider of mobile payment solutions competing with companies like Square and PayPal/iZettle, has expanded its operations into the U.S. market through a strategic acquisition.

The company has acquired Fivestars, a firm specializing in loyalty programs, marketing tools, and payment processing for small businesses.

Details of the Acquisition

Fivestars currently serves approximately 70 million consumers and 12,000 businesses across the United States. SumUp will pay $317 million for the San Francisco-based startup, utilizing a combination of cash and stock.

This acquisition represents an increase in valuation for Fivestars. Previously valued at $285 million following a Series D funding round in October 2020, as reported by PitchBook.

Factors Influencing the Sale

The reasons behind Fivestars’ decision to be acquired remain unclear. It is plausible that the shift away from in-person shopping during the pandemic impacted the company’s business, which heavily relies on physical transactions.

However, SumUp’s purchase signifies a commitment to capitalizing on the resurgence of brick-and-mortar retail as consumers return to physical stores.

SumUp’s Growth and Strategy

Founded in 2012, SumUp initially emerged as a European alternative to Square. The company has since broadened its offerings to include online payments and invoicing services.

Currently, SumUp boasts over 3 million merchant users across 34 markets. This substantial scale facilitated a $900 million debt raise earlier this year to support further growth initiatives.

This funding is being allocated to both platform development and expansion into new geographic regions.

Strengthening U.S. Market Position

While SumUp has maintained a presence in the U.S. for a few years, its impact has been limited, as acknowledged by Andrew Helms, SumUp’s managing director for the country.

This acquisition marks SumUp’s first U.S. acquisition and is intended to establish a stronger foothold in the American market.

Leveraging Fivestars’ Existing Business

Fivestars processes over $3 billion in sales and 100 million transactions annually. SumUp intends to utilize this established customer base to promote its own card readers and sales technologies.

The Fivestars brand will be maintained initially, with plans for eventual integration into the broader SumUp platform.

Leadership Continuity

Victor Ho, co-founder and CEO of Fivestars, will remain with the company, alongside the existing San Francisco-based team.

Ho stated that the partnership with SumUp was a natural fit, given their shared commitment to supporting small business success.

Strategic Alignment with SumUp’s Expansion Plans

The acquisition of Fivestars aligns with SumUp’s strategy of inorganic growth. Previous acquisitions include Payleven and Shoplo, which expanded SumUp’s capabilities in online marketplaces.

Notably, this acquisition introduces a loyalty program offering to SumUp’s portfolio, a capability previously absent.

SumUp plans to extend Fivestars’ technology to its existing markets in Europe and Latin America.