EU-based payments company SumUp has announced that it has acquired Silicon Valley based loyalty start-up Fivestars. SumUp has been described as the Square of the European region with its mobile-powered card readers that have made card acceptance fast and easy for small businesses. After its launch in 2012, SumUp has branched into e-commerce, and now processes transactions for more than 3 million businesses in 34 markets.
Fivestars was launched by two McKinsey alumni who saw an opportunity to make enterprise-grade loyalty technology available to small businesses. The company raised a $52.5M series D round in the peak of the pandemic last year, bringing its total investment to $145.5M, and facilitating a move to bundle payment processing services with its core loyalty platform.
“We founded Fivestars to give small businesses the opportunity to thrive in the digital economy and over the years, we’ve achieved just that,” Ho said in a statement. “Understanding that SumUp shares this mission, it was an easy decision to partner, and together, we look forward to supporting a retail market that champions small business success.”
This acquisition is strategic for SumUp because it both strengthens their very small presence in the US while also adding key loyalty functionality to its payments platform. It also illustrates the two big trends that have been drivers in the acquiring industry and will continue to gain importance going into next year:
- Acquirers must have a global view and a presence on the world stage.
- SMBs are looking for fully-functional turn-key solutions that help them run their businesses better, faster, cheaper while acquiring and retaining customers.
If the combined SumUp/Fivestars business continues to grow, especially in the US, look for them to buy a SaaS ISV to bring everything together in one software package.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group