What happened: Digital accounting provider Xero to buy the US Fintech company Melio for up to $3 billion (Reuters).
My comment: This acquisition is likely driven by two reasons, both of which are aiming to compete strongly with QuickBooks. Firstly, Xero is looking to grow its presence and customer base in the US, where it is well behind QuickBooks (and Xero’s market share in the US is much lower than in other key markets). Secondly, it lacks a proper accounts receivable and payments solution, the core product of Melio (see Rex Salisbury’s post on LinkedIn).
In the context of Embedded Finance, this acquisition represents another non-financial brand (perhaps a bit of a stretch for an accounting provider, but you know what I mean) acquiring a Fintech company. Until today, Xero’s customers have had to combine the two tools themselves; however, this will likely be nicely embedded after the acquisition and technical integration. Will more non-financial brands follow suit and acquire fintech companies? What do you think?
