The payment processing industry is projected to be worth $98 billion by 2027, but its future has gotten murkier during the COVID-19 pandemic.

More stores are adopting contactless payment methods, which require payment processing solutions. However, the economic crisis caused by the pandemic has also squeezed payment processors’ bottom lines. Lower discretionary spending has reduced their annual gross merchandising volume (GMV), increasing consolidation in online shopping has allowed giants to negotiate lower fees with payment processors, and users have been canceling payments for COVID-affect trips, events or flights at higher rates.

Amidst this rapidly changing landscape, GoDaddy agreed to buy Poynt, a payment processing solution for SMBs, for $320 million cash along with $45 million in performance incentives. The merger will create a digital SMB juggernaut. By acquiring Poynt, GoDaddy will be able to offer clients that it hosts full-stack payments solutions and move closer to providing its clients end-to-end frontend and backend support. The two parties aim to close the deal within Q1 2021.

What is Poynt?

Osama Bedier, an early executive at Paypal and Google Wallet VP, founded Poynt in 2013 to make secure and modern payment processing available to all businesses. Poynt’s signature product is the Poynt Smart Terminal, pictured below, that functions as the payment processor for in-store purchasing. Poynt integrates with 16 payment processors, including the five largest U.S. banks. Like rival processor Square, Poynt also provides invoicing and customer engagement features based on the payments data its terminals collect. 

Source: https://touchsuite.com/product/poynt-smart-terminal/

Poynt has gained impressive traction for a relatively young company. Poynt software and terminals are used by over 100,000 merchants. Over $16 billion in GMV runs through Poynt’s systems. Poynt has not revealed its recent growth metrics in any interview following the close of the GoDaddy merger, and did not respond to our requests for comment.

Can GoDaddy and Poynt Build a Retail Juggernaut?

Following the close of the acquisition, GoDaddy will open a new commerce division tasked with designing intuitive solutions to small business problems. Bedier will head this new wing of GoDaddy and report to GoDaddy Chief Executive Officer Aman Bhutani directly.

What sort of problems will this new Commerce Division focus on? It seems that Poynt could help the 50% of GoDaddy businesses that have both physical and online stores operate on a single payments platform.

“We get customers asking all the time for seamless integration,” Bhutani noted on an investor call. Since Poynt offers both in-person terminals and payment processing services for online transactions, it will help “reduce the friction between offline and online [commerce].”

Besides integrating online and offline payment systems, the Poynt acquisition suggests larger ambitions for GoDaddy to begin to provide full-stack commerce solutions to clients. In the press release announcing the deal, Bhutani hinted at this broader approach, noting that teaming up with Poynt “accelerates our strategy to provide a complete suite of commerce and payment services to address this critical customer need and focus on a large addressable market opportunity.”

It will be interesting to see whether GoDaddy continues to focus on payment solutions or expand to other online and offline commerce infrastructure verticals. If it’s the latter, the Poynt deal could be a warning shot to vendors that sell third-party services to GoDaddy clients.

ABOUT THE WRITER

Quinn Barry is a Tech Innovation Fellow from Stanford University covering innovations in digital privacy across finance and government.

Contact Quinn Barry at quinn@identityreview.com.

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