Xero Acquires Melio for $2.5B to Unite Accounting and Payments for U.S. SMBs

Xero to Acquire Melio in $2.5B Deal, Transforming U.S. SMB Accounting and Payments

Xero Limited has entered a binding agreement to acquire 100% of Melio, a U.S.-based small business payments platform, in a transformative deal valued at US$2.5 billion in upfront consideration, plus up to $0.5 billion in contingent payments. This landmark acquisition brings together Melio’s innovative accounts payable (A/P) technology with Xero’s cloud-based accounting platform to deliver a seamless, unified solution for U.S. small businesses, bookkeepers, and accountants.

“We’re thrilled to acquire Melio, which aligns perfectly with our 3×3 strategy and U.S. growth ambitions,” said Sukhinder Singh Cassidy, CEO of Xero. “Together, we will help millions of U.S. SMBs manage accounting and payments on a single platform.”

A Strategic Fit to Unlock U.S. Market Scale

The move is designed to supercharge Xero’s presence in the U.S., a market where 78% of SMBs prioritize integrated accounting and payment tools. By combining forces, Xero gains access to Melio’s customer base of 80,000 U.S. SMBs, its $30+ billion in annual payment volume, and its $153 million in FY25 revenue.

Melio’s platform simplifies A/P workflows with flexible integrations, multi-channel payment options, and purpose-built tools for accounting professionals. It also enables white-label syndication partnerships with firms like Fiserv, Capital One, and Shopify, offering further revenue and distribution opportunities.

“Joining Xero lets us scale our mission to reinvent how businesses pay each other,” said Matan Bar, CEO and Co-founder of Melio, who will lead the combined U.S. business post-acquisition.

Key Strategic Highlights

• Solves a Core U.S. SMB Need:
  Integrated accounting and payments address a critical customer pain point in a $29B+ TAM, driven by digitization and demand for real-time cash flow control.
• Accelerates Xero’s 3×3 Strategy:
  Melio fills key Jobs-To-Be-Done (JTBD) across A/P and A/R, enhancing Xero’s platform economics, average revenue per user (ARPU), and market reach.
• Adds a World-Class Team and Product:
  Melio boasts a Net Promoter Score (NPS) of 45, a top-tier technology stack, and a leadership team that will remain in place post-acquisition.
• Unlocks Revenue Growth & U.S. Expansion:
  The transaction will triple Xero’s U.S. revenue and ARPU on day one, diversify revenue into subscription + transactions, and allow deeper engagement with SMBs ranging from self-employed to mid-sized firms.

Transaction Details

• Structure: Merger of Melio and a wholly owned subsidiary of Xero
• Consideration: US$2.5B in cash and equity upfront + up to US$0.5B in contingent and deferred employee incentives
• Conditions: Subject to customary closing conditions including U.S. anti-trust (HSR), regulatory licensing approvals, and Melio shareholder consent (already secured)
• Break Fee: US$37.5M payable by Xero if HSR approval is not obtained

Looking Ahead

The transaction is expected to close within six months, pending regulatory approval. Post-close, Xero plans to invest in Melio’s continued growth, embed its payments features into the Xero platform, and expand its syndicated distribution through Melio’s embedded tech model.

“With Melio, we can deliver a market-leading, all-in-one Accounting and Payments solution—purpose-built for U.S. SMBs,” said Singh Cassidy.

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