Xero has agreed to acquire New York-based fintech firm Melio and its related entities in a cash and stock deal at an upfront value of $2.5bn.
Additionally, up to $500m will be paid over three years by Xero to Melio’s employees based on performance targets and employment conditions.
Xero is a cloud-based accounting software firm based in New Zealand.
The deal allows Xero to integrate Melio’s bill payment technology with its existing accounting software, targeting small and medium-sized businesses (SMBs) in the US. This integration is expected to address a common requirement among business users who seek combined financial software solutions.
Xero has linked the acquisition to its broader expansion efforts in North America and its internal “3×3” strategy, which focuses on product, customer and partner growth across three core geographic regions. The acquisition of Melio is expected to improve average revenue per user and scale operations in the US.
Melio currently supports approximately 80,000 business customers and is said to have handled over $30bn in payments in the financial year ending March 2025. It reported $153m in recognised revenue during that period, with an annualised run rate of $187m as of March 2025.
The leadership team of Melio, including CEO and founder Matan Bar, will join Xero, with Bar appointed to lead the unified US business unit.
Bar 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.”
Melio’s platform allows users to manage accounts payable workflows and select from various payment methods. Its service model also includes white-labelled and embedded payments offerings used by companies such as Fiserv, Capital One and Shopify.
The integration of Melio is expected to improve Xero’s market presence among businesses beyond its core customer base, reaching medium-sized firms and self-employed professionals. It also positions Xero to access new distribution channels through financial institutions and software platforms that serve millions of US businesses.
Xero CEO Sukhinder Singh Cassidy said: “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.”
Completion of the deal is scheduled within six months, subject to standard regulatory approvals and closing conditions.
