Xero acquires Melio for USD $2.5 billion to boost US growth

Xero has announced its acquisition of Melio, a US-based platform specialising in small business bill payments, in a transaction valued at USD $2.5 billion in cash and equity, with the aim of accelerating Xero's growth ambitions in the North American market.

The agreement sees Xero acquire 100% of Melio and its associated entities. The deal also includes potential additional contingent consideration of up to USD $0.5 billion, payable over three years to Melio employees, subject to outperformance targets, time-based measures, annual business goals, and continued employment.

Expanding North American presence

Melio provides accounts payable workflows and various payment options for small and medium-sized businesses (SMBs) and their accountants in the United States. The integration of Melio's capabilities with Xero is intended to solve what both companies identified as a critical customer need—combining accounting and payments in a single platform for SMBs.

Xero stated that this acquisition is a significant addition to its US offering and scale, forming an important part of its 3x3 strategy for international growth and product expansion. Payments, alongside accounting, have been cited as key needs for US SMBs, with approximately 78% placing high importance on having these solutions integrated.

The US SMB payments total addressable market (TAM) is estimated at USD $29 billion, with growth supported by increased digitisation of business-to-business payments and growing demand for solutions that streamline operations and cash flow management.

Leadership comments

Xero Chief Executive Officer Sukhinder Singh Cassidy, said:

"We're thrilled to announce we're acquiring Melio, a leading US B2B payments platform that strongly aligns with our 3x3 strategy and US growth ambitions. Adding Melio's world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform. Xero and Melio are highly complementary — together they complete the key jobs to be done for US SMBs, extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers."

"We're excited to welcome Melio's world-class team to Xero and look forward to working together to deliver on our shared goals once the transaction completes. We will continue to invest in Melio's Payments product and leverage Xero's go-to-market expertise to accelerate growth in Melio and Xero in the US. In parallel, we will embed Melio's features into Xero's core platform, creating a market-leading Accounting and Payments offering that maximises value for our US customers."

Matan Bar, Co-founder and Chief Executive Officer of Melio, said, "Joining Xero is an incredible opportunity for the Melio team to further our mission to reinvent the way businesses pay each other. Having worked closely with the Xero team, we're excited by our shared purpose to scale in the US and combine Xero's accounting capabilities with Melio's accounts payable and receivable solutions to create comprehensive product offerings for our collective, valued customer base."

Strategic rationale

Xero highlighted that Melio's integration will allow US SMBs and their advisors to perform core accounting and payment tasks within a single system. The technology provides businesses with flexibility in how they process payments, supported by dashboards and tools specifically tailored for accountants and bookkeepers. The two companies combined reportedly see the potential to reach new customer segments, broaden distribution channels, and deliver diversified revenue streams through a mix of direct and syndicated offerings.

Melio has developed a syndication model, enabling partners such as vertical software providers and financial institutions—including Fiserv, Capital One, and Shopify—to embed Melio's payment services within their own offerings. This provides an opportunity for Xero to further expand its reach. Fiserv alone serves approximately 18 million SMBs through some 3,500 financial institutions.

Transaction details and business impact

Xero expects the Melio acquisition to result in a near threefold increase in its North American revenue and average revenue per user (ARPU) upon completion. The company highlighted that Melio's recurring revenue, customer network, and embedded technology will enhance Xero's business, enabling further investment to scale up activities in the United States.

The transaction will constitute a merger of Melio and a newly formed wholly owned subsidiary of Xero, subject to standard regulatory and shareholder approvals, including required clearances under US anti-trust laws and consents for state Money Transmitter Licences.

Melio's leadership, including CEO and Founder Matan Bar, will remain in place post-acquisition, with Bar set to take responsibility for the combined US business, reporting to Xero's CEO. The integration will bring together teams from both Xero and Melio, spanning accounting, payments, and Melio's syndication network.

Melio business overview

Founded in 2018, Melio currently serves around 80,000 customers and processed over USD $30 billion in payments in its 2025 financial year, generating an annualised revenue of USD $187 million as of March 2025. Its platform is designed to reduce the cost and time of managing business payments, offering flexibility for both payors and payees, as well as tools aimed at advisors and businesses of varying sizes.

If for any reason the acquisition does not proceed solely as a result of a failure to obtain US anti-trust clearance, Xero has agreed to pay a break fee of USD $37.5 million. As of now, Xero has received commitments from Melio shareholders sufficient to approve the transaction.