Frankfurt The German-British financial start-up Sumup has made a major takeover in the USA. The payment service provider buys the marketing specialist Fivestars, which also offers merchants, among other things, payment processing, for 317 million dollars (274 million euros). This was announced by Sumup on Thursday morning.
Sumup, founded by two Germans, sells mobile reading devices for paying by debit and credit card. The fintech, headquartered in London, is primarily aimed at small retailers, restaurants and cafes. It also offers online payment processing.
Sumup wants to gain a foothold in the USA with Fivestars. Co-founder and CFO Marc-Alexander Christ said: “Now is the time for the presence in the USA to be just as strong as in Europe.” The native of Frankfurt brought Sumup to the start in 2012. The company puts the number of active users at three million and is active in 34 countries.
Fivestars, on the other hand, helps small retailers, for example, with customer acquisition. Christ was confident that the customers’ economic situation would continue to improve – especially with the help of the Fivestars takeover.
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Many small traders were hit hard by the lockdowns in the corona crisis. Sumup himself also felt the consequences of the pandemic and has since throttled its growth targets. On the one hand, Sumup pays for the takeover with cash deposits. On the other hand, the Fivestars owners receive shares in Sumup.
Cash injection from Goldman Sachs and Temasek
The payment service provider took out a loan of 750 million euros in March – an unusual step. As a rule, start-ups are financed through investments by venture capitalists who participate in the company. The funds for the latest loan came from, among others, the US investment company Bain Capital, the US investment bank Goldman Sachs and Singapore’s state fund Temasek.
According to its own statements, Sumup has raised more than a billion euros in debt and venture capital. Further loans amounting to almost 400 million euros from 2019 and 2020 are known. The March loan was also used to refinance existing loans.
Sumup is silent about his assessment. The company does not comment on the business figures either. The industry service “Finanz-Szene” recently reported, with reference to the Luxembourg consolidated financial statements, that Sumup achieved sales of almost 390 million euros in 2020. The fintech therefore earns through fees for payment processing and the sale of the mobile payment terminals.
Sumup has long been considered a candidate for an IPO. At the end of 2020, Christ told the Reuters news agency that an IPO was “at least three to five years away”. Like other payment service providers, Sumup benefits from the fact that more and more consumers worldwide are paying with cards or smartphones instead of cash. Internet shopping is also growing rapidly.
Nevertheless, the market is highly competitive. Among the competitors in Sumup’s core business is iZettle, a subsidiary of the US payment service PayPal.
In Germany, several banks and other payment companies are also increasingly trying to win over small retailers – increasingly with mobile payment devices. In addition, the technology is changing and instead of extra card terminals, smartphone apps are gradually being offered for accepting mobile phone payments, in the technical jargon “Smart POS”. POS stands for “Point of Sale”.
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