FinTech News
PayPal Takes on Square with iZettle Acquisition
FinTech icon PayPal has confirmed that they are acquiring Swedish payments company iZettle in a $2.2 billion deal. Referred to by some as the “Square of Europe,” iZettle’s site says it’s “on a mission to help small businesses succeed in a world of giants” by offering mobile payment solutions, including chip readers and software. Thus, with the acquisition, PayPal is clearly looking to increase their in-store presence to better compete against Square, Stripe, and others.
In a blog post announcing the deal, iZettle CEO and co-founder Jacob de Geer notes that his company had actually started the process of launching an initial public offering. However he says that, while PayPal and iZettle had previously held talks about working together, it wasn’t until their potential IPO plans were set in motion that things became serious. According to TechCrunch, the acquisition is expected to close in the third quarter of this year.
Staying true to his company’s stated mission, de Geer wrote that PayPal and iZettle joining forces would allow them to further help small business owners. As he put it, “[D]uring our discussions with PayPal’s President and CEO Dan Schulman and his team, it has become obvious that we share the same belief in the power of small businesses. They create diversity, choice and opportunity in society, but they’re still underserved by the incumbents. Small businesses deserve something better.” He went on to say, “The two companies have complementary product offerings and geographies. PayPal views iZettle’s capabilities and talent as best-in-class and we will work together to scale our reach and geographical footprint. iZettle will become a center of excellence for PayPal’s in-store product and services offerings for small businesses going forward, which I’m really excited about.” PayPal’s Schulman echoed those sentiments in his own statement, saying, “Small businesses are the engine of the global economy and we are continuing to expand our platform to help them compete and win online, in-store and via mobile. iZettle and PayPal are a strategic fit, with a shared mission, values and culture—and complementary product offerings and geographies.”
For PayPal, the $2.2 billion all-cash acquisition is their largest ever. Previously the company had purchased Xoom for $890 million and Braintree (which itself had acquired Venmo for $26.2 million) for $800 million. Incidentally, iZettle’s planned $227 million IPO would have valued the company at $1.1 billion.
PayPal’s big buy also comes on the heels of the company expanding into the realm of more traditional banking services. This includes offering mobile check deposit, issuing debit cards, and FDIC-insured accounts. Meanwhile PayPal has also made attempts at growing their own in-store payments service, although they’re far more known for their core online payments products.
Not only is PayPal’s purchase of iZettle a strong move for the company but is likely also a win for FinTech and small businesses. That’s because, with the increased competition Square faces from a combined iZettle and PayPal, you can expect that all parties will be looking to innovate and expand even more. With that, we’ll have to wait and see what comes of the PayPal’s latest partnership and whether we’ll start seeing more iZettle products popping up in stateside small businesses.
