U.K. mobile payment firm SumUp buying U.S.-based Fivestars

The mobile point-of-sale provider SumUp has agreed to buy Fivestars, a San Francisco company that provides digital payment technology for consumers and merchants.

The $317 million cash and stock deal would be the London company's first acquisition in the U.S. Fivestars staff and CEO Victor Ho would remain in their positions and operate Fivestars.

SumUp, founded in 2012, produces mobile card readers that support payments for small businesses. It has more than 3 million merchants in its network and is one of several companies that offer web-connected payment and merchant services as a way to lure small businesses away from banks.

The Fivestars deal is the latest move in a technology arms race among these firms to compete with each other and with traditional merchant acquirers.

SumUp has a U.S. presence and is looking to add local market expertise and a pre-existing merchant network to get larger. SumUp earlier this year announced it would use a $900 million fundraise to add scale in the U.S. and other markets.

Acquiring the 11-year-old Fivestar would give SumUp 70 million additional consumers and 12,000 merchants that use Fivestars' technology, which integrates payments with reward marketing programs and promotions.

SumUp has diversified its technology beyond payment acceptance, partnering with the visual content firm Shutterstock to enable merchants to redesign their digital storefronts. It also works with Mastercard and Ford to embed payment technology in the vehicles that small merchants use as part of their business.

SumUp, which passed the $1 billion "unicorn" valuation in 2019, faces fierce competition in Europe and the U.S.

SumUp's rivals in Europe include Zettle, which PayPal acquired in 2018. PayPal earlier this year launched an American version of Zettle that supports integrations with accounting and e-commerce technology connections to BigCommerce, Quickbooks Online and other digital business services.

Square has been active in Europe for about five years, and PayPal acquired Zettle in part to ward off Square's European play. And Square, PayPal and Stripe will offer ample competition in the U.S.; Square has an industrial bank license that allows it to lend directly to merchants.

"Now is the time to make sure our presence is as strong in the U.S. as it is in Europe. And by acquiring Fivestars, SumUp will deliver for U.S.-based merchants as it has in other international markets," Marc-Alexander Christ, a SumUp co-founder, said in a press release.