PayPal is a leading technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide.
In May 2018, PayPal announced that it had agreed to acquire Zettle, the leading small business commerce platform in Europe and Latin America, for $2.2 billion USD.1
As PayPal’s house bank, J.P. Morgan was asked to help with the integration of newly acquired company, Zettle within the wider PayPal group treasury structure.
The most important objectives were to:
PayPal joined forces with J.P. Morgan to migrate the notional pooling solution, which was implemented in two phases:
In Phase 1, the existing header account and multi-currency notional pool for PayPal remained in London, while a new Luxembourg-based multi-entity, multi-currency notional pool was established to incorporate the newly acquired Zettle entities, as well as the PayPal treasury center. This structure facilitated the centralization of funds and automated funding as required, without the need for direct intercompany lending relationships between the entities.
To minimize disruption of underlying payment activity, PayPal, Zettle and J.P. Morgan worked to put in place multibank sweeps with Zettle’s existing banks. These sweeps allow the fully automated consolidation of funds and funding of operating accounts as required.
A cross-border automated “drain” sweep to extract the net balance across both London and Luxembourg pools was implemented to seamlessly concentrate cash held within the two pools across the different locations into a single bank account, giving PayPal’s Treasury a single consolidated liquidity position for ease of deployment.
In Phase 2, the two notional pooling structures were seamlessly combined as the London structure migrated to Luxembourg, integrating the existing London-based accounts into the new multi-entity notional pooling structure in Luxembourg.
The transition was simple, thanks to the pre-existing Luxembourg liquidity structure, which had been fully tested and used by a subset of entities for a number of months.
The migration was successfully enacted, prioritizing speed and efficiency for the accounts and resulted in:
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