Xoom at PayPal: A deep-dive into the brand inside the payments giant, and why it might sell

PayPal is reportedly looking to sell remittance player Xoom, but how has it handled the company since it acquired it eight years ago, and how does Xoom stand in the market?

Last week, reports broke that PayPal was looking to sell its remittance arm Xoom amid increasing pressure from activist investor Elliott Management. This would see the company sell a brand that it first acquired in 2015, back when Xoom itself was a publicly traded company. Then, PayPal paid $890m for Xoom.

Although not yet confirmed by the payments and ecommerce giant, the move comes just a month after the retirement of former Xoom CEO John Kunze, who has continued to play a role at Xoom as a PayPal brand over the last eight years.

However, it appears to have been some time since Xoom saw notable investment from its parent company. With the exception of a single announcement in January of this year about the extension of Visa Direct support for Xoom, the company has not announced any new features or been mentioned on a PayPal earnings call since 2020. Its social media accounts have also remained dormant since 2021.

Despite this, the company remains a relatively strong player and, with the right investment, could prove a key challenger as both long-established and newer players grapple with the ongoing digitisation of the remittance market. But where does it sit, and how has it diverged from PayPal’s other offerings? We take a look in this detailed report. 

Topics covered:

• Xoom before the acquisition
• Xoom since PayPal
• PayPal since Xoom
• PayPal’s lack of investment in Xoom
• Xoom’s position in the remittance market
• Xoom’s pricing versus competitors
• Xoom’s potential as a standalone player

Xoom before the acquisition

Established in 2001, Xoom began life as a remittance provider that enabled customers from 38 countries to send money to friends and family in Jamaica and the Dominican Republic, before expanding this to 14 receive markets across Asia and Latin American in 2004. 

Having raised a total of $104.3m over seven funding rounds, with Sequoia Capital being one of its most prolific investors, the company went public via an IPO on the NASDAQ in February 2013. Two years later, it was acquired by PayPal. CEO John Kunze, who took the helm in 2006, stayed on at the company for the following eight years.

Prior to its acquisition by PayPal, both before and during its time as a public company, Xoom reported steadily rising results, reaching profitable adjusted EBITDA from 2013 onwards.

Xoom since PayPal

When PayPal acquired Xoom in 2015, the company said that it would enable Xoom to expand into new markets, with Kunze stating that the acquisition would “help accelerate our time-to-market in unserved geographies and expand the ways we can innovate for customers”.

The company does appear to have delivered on this promise. In 2015, Xoom supported money transfers to 39 countries. This rose to 53 in its first full year as a PayPal subsidiary, and by 2019 had climbed to 159. Today, Xoom supports money transfers to 163 countries worldwide from 39 countries and territories.

In expanding its reach, Xoom has also seen it grow its presence in many parts of the world. Since 2015 it has in particular added receive capabilities in the US and much of eastern Europe, as well as large parts of Africa where it previously only had a small presence.

Xoom has also added a number of capabilities during this period, including send-to-card through a PayPal partnership with Visa Direct and domestic transfers in the US through partnerships with Walmart and Ria. It has also added the ability to send to mobile wallets in Africa and made it possible to both send and request remittances through its app.

How does Xoom’s coverage and send capabilities compare to its competitors?

Xoom’s place in the PayPal user journey

PayPal is quick to direct users to Xoom for cross-border payments. In addition to PayPal’s normal send method – searching for a recipient’s name, username or email – a user can send to a bank account, send cash for pick-up, send an invoice, send a digital gift card or send and receive donations. 

Choosing to either send to a bank account or send cash for pick-up redirects the user to accept the Xoom user agreement, after which they can select the country they are sending to and proceed with Xoom.

PayPal since Xoom

However, while Xoom has increased its geographical and technical capabilities under PayPal, the payments giant does not appear to have acquired significant benefits from its remittances brand. 

In 2015, PayPal President Dan Schulman said that the acquisition would allow “PayPal to offer a broader range of services to our global customer base, increase customer engagement and enter an important and growing adjacent marketplace”, with the announcement press release highlighting the potential for PayPal to “extend its offering” to Xoom’s customers.

But over the last few years, PayPal has shifted its focus to ecommerce, in addition to increasing money transfer capabilities within its core PayPal brand, making Xoom a less meaningful addition to the company’s services. This was particularly pronounced during the Covid-19 pandemic, when remittance flows reduced while ecommerce saw a sharp dramatic uptick. 

For PayPal, this prompted a dramatic increase in growth throughout the pandemic, which remittances would not have meaningfully contributed to. And now that the pandemic has largely passed, PayPal has seen a significant drop in its growth rate to solid but below pre-pandemic levels.

As with much of the rest of the market, this has seen PayPal’s share price drop significantly, which has attracted interest from activist investors and prompted considerable belt tightening. In February 2023, the company announced it was laying off around 2,000 employees – approximately 7% of its workforce – and analysts have warned that it may need to make more cuts as the widespread economic downturn continues to hit its payment volumes. 

The sale of Xoom may therefore prove to be a vital way for the company to streamline its business to focus on areas where it sees strong future growth potential.

PayPal’s lack of investment in Xoom

While PayPal may be looking to sell Xoom now, there is considerable evidence to suggest that the payments giant has not considered the brand a core part of its offering for some time.

Our own analysis of PayPal’s earnings calls from 2015 through to today shows that Xoom was initially a key topic of discussion in earning calls in the year following its acquisition, with the company highlighting details including net new actives and market expansions. However, that fell off sharply in the following years. 

In 2019 there was a small upswing in mentions, which focused on its market reach improvements, including the addition of US domestic payments through a partnership with Walmart and Ria. However, Xoom has not been mentioned by name since Q3 2020, when it was only featured due to an analyst question and was described as a “pretty small part of [PayPal’s] overall volume”.

Similarly, PayPal’s PR efforts surrounding Xoom have also dropped off significantly over a similar time period. While the company has increased the rate of press releases it has sent in the last few years, the number that mention Xoom at all – let alone focus on the brand – have notably reduced. 

In 2017 and 2018, the brand was included in the ‘About PayPal’ section of every press release, however this was dropped in Q3 2019. The three press releases that specifically addressed Xoom in 2019 all concerned market expansions, including the addition of 32 receive markets in Europe, the ability to send to banks in South Korea and the launch of US domestic money transfers. This was the last time that Xoom added more than a few receive markets to its service.

Since then, the company saw a number of press releases mentioning the brand in 2020 – largely focused around PayPal’s pandemic support efforts – as well as a single press release at the start of this year.

During this time, the focus of Xoom’s press releases has shifted. While earlier releases under PayPal focused on the brand’s digital and mobile-first capabilities, this shifted to speed during 2019.

2019 was also the last year Xoom engaged in significant marketing efforts, through a partnership with Olympic sprinter Usain Bolt. However, it appears that Xoom has significantly pared back its marketing efforts since then. 

Xoom’s place among PayPal’s brand family

Since the acquisition of Xoom, PayPal has also acquired numerous other brands, with the remittance player appearing as one of ten of its “Family of Brands” that it features on its website. Notably, the vast majority of the acquisitions since Xoom have far more tightly focused on ecommerce-related activities, suggesting that this is now PayPal’s priority.

Despite this, Xoom remains one of the more popular options among PayPal’s sub-brand apps, indicating that there is solid consumer support for the brand.

Xoom’s position in the remittance market

While PayPal does not appear to have prioritised investment in Xoom since before the pandemic, the brand does maintain relatively strong positioning against competitors on a number of key metrics. 

In terms of app downloads – a key signifier for a digital-first brand such as Xoom – Google Play reports its lifetime downloads as being between 5 and 10 million for both its UK and US stores. This puts it at the same level as WorldRemit and Paysend, as well as Western Union’s UK app, and above MoneyGram and Ria. However, Wise and Remitly, as well as Western Union’s US app, have higher lifetime downloads, at 10+ million. 

However, more recent app download data paints a different picture. Global data for April across Android’s Google Play and Apple’s App Store puts Xoom significantly behind the majority of its competitors, suggesting that downloads have fallen off over the past few years. 

The data also shows an interesting split between Apple, which has higher market share in developed Western nations, and Android, which is far more dominant in emerging markets. This provides an indication of the dominant user types for each app, suggesting that Xoom’s app is more popular in the West.

In terms of customer ratings, analysis we conducted in April shows that Xoom retains a favourable average app store rating of over 4.5 out of 5, which remains unchanged since 2021. However, during the same period its Trustpilot rating has declined significantly compared to most other brands, sitting between 2.5 and 3 out of 5.

Meanwhile its website traffic shows an interesting picture compared to other brands. It is performing surprisingly well compared to its competitors, with web traffic that sits between Remitly and MoneyGram. However, the percentage that is coming from organic search – that is, people using Google and other search engines to find the website without clicking on adverts – is much lower than all of its competitors apart from TransferGo. 

This suggests that Xoom does not have an active team engaged in SEO efforts – which echoes evidence of its lack of marketing team – and indicates an area of strong low-hanging fruit for a potential buyer.

Meanwhile, despite having an entirely dormant social media presence, Xoom’s social media accounts are similar in terms of follower numbers to some of its competitors – although not at the level of the market leaders. 

When it did post, the company appeared to prioritise Facebook and Twitter, where it has the strongest presence. It also has no presence at all on some more recent platforms such as TikTok. Any potential buyer would need to invest resources to reestablish Xoom’s social media presence, but the company provides a reasonable foundation on which to build.

In terms of technical capabilities, meanwhile, Xoom is competitive but not as broad as bigger competitors when it comes to receive markets. This may mean there is room for market expansion for a potential buyer, or provide areas where an existing brand in an adjacent market could grow.

Meanwhile, on pay-in and pay-out capabilities, although Xoom has some areas where it does not compete with other brands, it is largely competitive and so presents a potentially valuable property for the right buyer.

Which corridors does Xoom serve?

Xoom’s pricing versus competitors

Xoom is one of the more expensive money transfer players, as would be expected from its position within the premium-priced PayPal brand. However, significant variation exists across corridors and for different payout combinations. 

For a deeper dive on specific corridor pricing versus the competition over the years to current day, our FX Pricing data can provide much deeper insights for those who are interested.

Get in touch for more information on benchmarking pricing for Xoom against its peers globally

Xoom’s potential as a standalone player

Xoom under PayPal has not fulfilled the brand synergies that both companies hoped for when they first announced the acquisition in 2015, however for the right buyer the company does present a potentially strong asset. 

While it looks as if there needs to be considerable investment in marketing and related areas, as well as, potentially, some technical areas, Xoom represents a consumer brand that is competitive on a number of metrics. Significantly, it also has a number of fronts where value can be added relatively simply, namely around customer acquisition efforts across search and marketing.

The question then, is if PayPal does sell Xoom, who is likely to buy it? Given its lack of success at a larger company, it is most likely that a buyer will be a private equity investor looking to run the company as a standalone property, with a view to growing it and either selling it on or again floating it in a public offering. Recent examples of companies taken private in this manner include Convera and remittance competitor MoneyGram.

However, this is not the only option. The rise of payments-focused fintechs has increased interest in similar companies for their technical capabilities, rather than their potential as a customer-focused brand, and Xoom could be bought to be absorbed into another company. Papaya Global’s acquisition of Azimo is an example of this, with Papaya Global ceasing Azimo’s customer activities to use the money transfer player’s technical capabilities to run its own cross-border payments.

Finally, there is also the potential of a scale acquisition by a bigger player. While consumer money transfers is highly competitive, Xoom would not add significant scale to the most established players, and taking it off the board would be unlikely to significantly reduce competition, with the possible exception of a number of very specific corridors.

However, a B2B money transfer player or another player in an adjacent cross-border or payments field may see Xoom as a means of entering the consumer remittances space or building out its payout capabilities. Here Xoom’s mobile-first approach may be beneficial as multiple players are attempting to become superapps, and such an acquisition may prove to be a key piece of the puzzle.