The acquisition is expected to accelerate PayPal’s into bill payments with 14 million consumer bill pay accounts.
TIO processed more than $7bn consumer bill payments for the fiscal year ended 31 July 2016, earning a revenue of $57.1m.
PayPal president and CEO Dan Schulman said: “By acquiring TIO and integrating bill payment into our global payments platform, PayPal adds another key service in our efforts to become a part of a consumer's everyday financial life.”
PayPal plans to fund the transaction with cash on its balance sheet. The acquisition is expected to close in the second half of 2017.
Following the completion of the transaction, TIO will operate as a service within PayPal.
TIO chairman and CEO Hamed Shahbazi said: "We founded TIO to make speed and access part of the bill payment experience for the underserved, and we believe that we have created affordable products to serve the needs of all customers.
“Our mission fits perfectly with PayPal's vision to democratize money. As part of the PayPal team, we believe we will accelerate our growth through expanded distribution and continue increasing access to more billers and services."
The transaction is subject to the approval of at least two-thirds of the votes cast at a special meeting of TIO shareholders and optionholders. It is also subject to other closing conditions.
The meeting of shareholders and optionholders is expected to be held in April, 2017.
In November 2015, PayPal acquired digital money transfer or remittance provider Xoom. The transaction was expected to speed up PayPal's entrance into the international remittances market.
Image: PayPal's corporate headquarters in San Jose, California. Photo: courtesy of Sagar Savla / Wikipedia.
