PayPal has announced its biggest acquisition to date, buying the Swedish mobile payments business iZettle for $2.2bn (around £1.6bn).
The move surprised some commentators as iZettle had appeared to be an ambitious start-up that had only recently announced its intentions to float on the stock market in order to raise an additional $227m.
iZettle’s CEO and Co-Founder Jacob de Geer explained: "Late in the IPO process, PayPal got in touch and showed a serious interest in iZettle. The relationship with PayPal is not a new one, in fact we’ve talked about different ways of working together for years. But this time it very quickly turned into a detailed discussion on how we could benefit from joining forces. And we both realised the great opportunity in doing just that."
iZettle sells a card reader aimed at small businesses, and the purchase seems to cement PayPal’s intentions to become a bigger player in “bricks and mortar” in-store payments as well as online.
iZettle provides small businesses with card payment solutions
De Geer had previously described how he decided to set up the company after his wife, a sunglasses importer, returned from a trade fair complaining that she had missed out on business because she couldn’t accept debit card payments from potential customers. Banks’ mobile readers were often prohibitively expensive and his research revealed that there were 20 million small businesses throughout Europe that would benefit from a more affordable solution.
The business quickly took off in Sweden and across mainland Europe and also gained a foothold in different countries around the world, including Mexico and Brazil.
De Geer told the BBC that Sweden was a “tech savvy” country that loved to embrace new technology and trends.
"It's one of the reasons why Sweden is a common test bed for many international companies to test their products. They know if it flies here it will probably fly in most other places as well," he said.
Purchase puts PayPal into more physical stores
The combination will bring PayPal’s scale together with iZettle’s experience of in-store payments and point-of-sale technology, not to mention its existing presence in 12 markets across Europe and South America and half a million small business clients.
PayPal’s CEO and President Dan Schulman said: "Small businesses are the engine of the global economy and they are increasingly demanding a partner that can provide a one-stop solution to help them compete and win online, in-store and via mobile.
“This is the largest acquisition in our company’s history and significantly expands our in-store presence around the world, strengthening our platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment."
While this is PayPal’s biggest acquisition to date, the company has been busy buying up financial and payment-based businesses. In 2015, it paid $890m for international money transfer service Xoom. In the same year, it also paid $280m for mobile payments start-up Paydian, and last year it bought Canadian bill payments services company Tio Networks for $238m.
