Wellington-based accounting software company Xero announced on June 24, 2025, that it plans to acquire Melio, a US-based SMB bill payment platform.

The deal is valued at US$2.5 billion cash and equity deal.

Melio, founded in 2018, offers accounts payable workflows and payment solutions for SMBs and accounting professionals.

The platform has served over 80,000 customers and processed more than $30 billion in payments in the past fiscal year.

The acquisition supports Xero’s “3×3 strategy” to expand product offerings and scale in key markets.

Xero will integrate Melio’s solutions into its platform while continuing to invest in Melio’s standalone offerings.

The deal is subject to regulatory approvals and expected to close within six months.

🔗 Source: Xero

🧠 Food for thought

1️⃣ Xero’s massive $2.5B acquisition represents a strategic shift in scale and ambition

The Melio acquisition marks a dramatic departure from Xero’s previous acquisition strategy, reflecting an aggressive expansion approach.

Xero has historically made much smaller strategic acquisitions to build its ecosystem, including Hubdoc for $70 million in 2018 and Instafile for NZ$10 million later that same year12.

This significantly larger deal signals Xero’s determination to rapidly expand in the competitive US market rather than continuing its pattern of gradual growth through smaller acquisitions.

The high valuation reflects the growing importance of payment infrastructure, with Xero specifically highlighting the $29 billion US SMB payments market opportunity in their announcement.

Xero’s willingness to commit such significant resources indicates they see payments integration as essential to competing against established US accounting platforms and expanding beyond their stronger markets in Australia and New Zealand.

2️⃣ Integration of accounting and payments addresses a critical market need

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