GoDaddy Gets the Poynt

You may have read last month that the huge Web domain registrar and hosting service GoDaddy is buying a POS terminal startup called Poynt. The deal calls for $320 million in cash upfront and another $45 million in cash down the road. That’s not a bad payday for a company that started only seven years ago in a highly competitive business facing a wave of change.

But Poynt is more than payments hardware. It also invested heavily in software development to process the transactions that flow through its devices. The company’s founder, Osama Bedier, knows payments processing—and the data that processing can throw off—intimately, having held senior-level positions first at PayPal and then at Google. You may recall him introducing the first version of Google’s mobile wallet back in 2011, fully three years before Apple Pay came along.

So what is an Internet business like GoDaddy doing buying a firm like Poynt? The transaction is interesting on two levels. First, it allows GoDaddy to offer processing capability to the 20 million businesses on its platform, many of which, as GoDaddy’s top brass point out, also run physical stores. But on a deeper level, it also gives GoDaddy the ability to attract more businesses with the proposition that the Web-services firm can now smooth their way into digital-payments acceptance.

How does that work? It turns out Poynt is what the industry calls a payments facilitator. The term doesn’t roll trippingly off the tongue, but what it means is that Poynt can recruit small merchants and let them run transactions on Poynt’s merchant account. The merchants save a lot of time and effort, and Poynt adds to its merchant base. The technique has been around for a while. Firms like Square and Stripe have used—and prospered—with it for years

Now, GoDaddy, with its global reach, figures to join in. Its chief executive, Aman Bhutani, is ready to start using that payfac capability to expand his company’s reach. “We get customers asking all the time for seamless integration,” Bhutani told equity analysts last month on a call to discuss the Poynt deal. “They want online and offline together.”

So if you’re wondering what a Web company like GoDaddy is doing doling out big bucks for a POS device maker like Poynt, that’s the rationale. It’s on a different plane from Worldline snagging its fellow French enterprise Ingenico, which to most observers seemed almost a matter of routine. Instead, it’s a testament to what Bedier and his crew have built, a salute to the payfac model, and a clear indication of GoDaddy’s ambitions in acquiring—and not just in North America.

—John Stewart, Editor, john@digitaltransactions.net