Xero has announced its largest US-focused acquisition to date, agreeing to buy Melio, a leading US-based small business bill pay platform, in a $2.5B cash and equity deal. The acquisition is expected to accelerate Xero’s strategic push into the US by unifying Accounting and Payments in one platform for small and medium-sized businesses (SMBs). With this move, Xero aims to deliver a significant step change in its North American scale and value proposition.
For many US SMBs, managing cash flow has long been a juggling act involving disconnected accounting systems, manual payments, and slow processes. Xero’s acquisition of Melio addresses that pain point directly, promising an integrated solution that simplifies accounts payable (A/P), accounts receivable (A/R), and cash flow visibility. By combining Melio’s payments engine with its core platform, Xero intends to help business owners, and their advisors save time and improve accuracy, all within a unified ecosystem.
A deal that reshapes Xero’s US growth trajectory
The acquisition of Melio aligns with Xero’s “3×3 strategy,” a framework focused on three priority markets (Australia, New Zealand, and the US) and three key product areas (Accounting, Payroll, and Payments). Melio’s deep capabilities in A/P workflows and partner integrations significantly strengthen Xero’s US offering, creating an end-to-end solution for small businesses and their advisors.
Melio, founded in 2018 and headquartered in New York with operations in Tel Aviv, serves over 80,000 US customers. The platform processed more than $30B in payments in FY25, generating $153M in revenue with an annualised March 2025 run rate of $187M. Its appeal lies in simplicity, customers can automate A/P processes and pay vendors using a wide choice of payment methods, with user-friendly dashboards for SMBs and accountants alike.
Xero’s female CEO Sukhinder Singh Cassidy commented, “We’re thrilled to announce we’re acquiring Melio, a leading US B2B payments platform that strongly aligns with our 3×3 strategy and US growth ambitions. Adding Melio’s world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform.”
Melio Co-founder and CEO Matan Bar added, “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.”
Xero unlocks new US growth through Melio’s embedded payments network
This acquisition brings together two complementary forces. Melio’s A/P solutions and white-label syndication network extend Xero’s reach not just to direct SMB customers, but also through embedded offerings via financial institutions and vertical SaaS providers. Current partners include Shopify, Capital One, and Fiserv-whose platform alone powers over 3,500 financial institutions serving around 18M SMBs.
Melio’s product integration will allow Xero to offer a holistic solution, catering to businesses of all sizes and stages, from self-employed entrepreneurs to medium-sized enterprises. The addition of Melio’s syndication model also creates new distribution channels, positioning Xero to reach pre-accounting customers and expand its presence in the US at scale.
Upon completion of the transaction, Matan Bar will lead the combined US business, reporting to the Xero CEO. The deal is expected to close within six months, subject to regulatory approvals and customary closing conditions.
Cassidy emphasised, “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.”
Unlocking the next era of SMB financial software
The $2.5B deal-plus up to $0.5B in performance-based deferred payments-represents a strategic leap forward for Xero, with a potential threefold increase in North American revenue and Average Revenue Per User (ARPU) from day one. It also shifts Xero’s business model toward a dual revenue stream of subscription and transactions, enabling more diversified and sustainable growth.
Melio’s platform, backed by a team with deep expertise in payments and fintech, has already achieved a strong customer satisfaction score (NPS 45) and maintains embedded relationships with major banking and SaaS partners. By integrating it into the Xero ecosystem, the combined platform is set to offer unmatched simplicity, flexibility, and scale to millions of US small businesses navigating digital transformation.
