In a landmark move to expand its footprint in digital B2B payments and ecommerce, Xero Ltd is acquiring U.S.-based payments platform Melio for up to $3 billion.
The deal includes $2.5 billion in upfront cash and equity plus $500 million in performance-based earnouts. It’s the largest in Xero’s history. It signals a strategic pivot toward embedded financial services for small and mid-sized businesses (SMBs).
The acquisition gives Xero end-to-end control of a fast-growing Melio B2B payments engine at a time when demand for integrated financial workflows is rising. Melio was founded in 2018 and is based in New York. It processed more than $30 billion in payments and generated $153 million in revenue in fiscal 2025. The company’s cloud platform simplifies accounts payable and receivable for SMBs, a sector where only 27% currently use integrated accounting and payment systems.
By folding Melio into its product stack, Xero aims to close that gap and become a one-stop shop for financial operations. The U.S. SMB payments market, estimated at $29 billion, is now a core focus for the New Zealand-based software company as it pushes deeper into North America.
“This acquisition brings together two highly complementary platforms,” said Xero CEO Sukhinder Singh Cassidy. “Melio’s payments technology and distribution model, combined with Xero’s accounting tools, creates a more complete solution for U.S. small businesses managing cash flow.”
About Xero’s acquisition of Melio
Melio expects its white-label and embedded payment tools to serve as a distribution engine for Xero. Partners such as Capital One, Shopify, and Fiserv already use them. Rather than sell directly to every SMB, Xero can now syndicate its services through banks and SaaS platforms already serving the segment.
Post-acquisition, Melio CEO and co-founder Matan Bar will lead Xero’s U.S. operations, reporting directly to Cassidy. The company said Melio’s entire team will remain in place. It plans to expand existing partnerships and embed Melio’s features across the broader Xero platform.
The companies expect to close the deal within six months, subject to:
- U.S. antitrust review under the Hart-Scott-Rodino Act
- State money transmitter license approvals
- A shareholder vote
Xero has already secured enough shareholder support to proceed. A $37.5 million break fee will apply if the transaction is blocked by regulators.
Beyond scale, the deal signals a strategic evolution for Xero. It diversifies the company’s revenue model, adding transaction-based income to its core subscription business. It also supports its “3×3 strategy”: building capabilities across accounting, payments, and payroll in three key markets (ANZ, the U.K., and North America).
For the broader digital B2B commerce ecosystem, the acquisition underscores the growing convergence of fintech and back-office software. As SMBs demand real-time payment capabilities and tighter integration with their financial tools, platforms like Xero and Melio are positioning to become essential infrastructure.
Melio’s high customer satisfaction (NPS of 45) and focus on user-friendly, advisor-friendly workflows have fueled rapid adoption. Xero expects the acquisition to nearly triple its North American revenue and significantly increase average revenue per user from day one.
It will finance the deal financed through a mix of available cash and new equity issuance.
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