PayPal swoops on iZettle in $2bn tie-up

PayPal buys Swedish start-up iZettle for $2.2bn in its biggest ever deal

The company's cofounder and CEO, Jacob de Geer, explains how an IPO quickly turned into a multi billion-dollar acquisition.

TechCrunch also points out that some of iZettle's key markets such as northern Europe and Latin America, the latter through a tie-up with Santander, will introduce Paypal to areas where it has no presence. As per the last earnings call, the financial payment giant has a strong cash reserve of $7.8 billion, giving it enough financial muscle for acquiring promising companies.

The chip-card reader and its app for smartphone-based mobile commerce meet worldwide security standards. iZettle's service is available in 12 countries which includes United Kingdom, Finland, Denmark, Germany, Italy, Netherlands, Spain, Italy, Germany, and Brazil, among others.

Based in Sweden, iZettle has built a presence in Europe and South America that will allow PayPal to bring its platform to almost 500,000 stores in 11 new countries including France, Germany, Brazil and Mexico. According to a statement by the two companies, iZettle expects to generate gross revenue of about $165 million in 2018, with roughly $6 billion of total payment volume expected to be processed on its platform.

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Schulman described the merging of iZettle and PayPal as a "strategic fit" combining shared values and culture with complementary product offerings and geographies. IZettle does not now face too much direct competition from its main rival, the NASDAQ-listed Square, as the companies' operations only really overlap in the UK.

Upon closing of the deal, PayPal will gain in-store capabilities in Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Norway, Spain and Sweden.

"IZettle's goal was to go for an IPO, there was no real dual track", said Johan Brenner, general partner at Creandum, an investor in iZettle. "The combination of iZettle and PayPal will provide tremendous benefits to our merchants who will have access to an even wider range of tools to help them get paid, sell smarter and grow". The San Francisco-based company continues to operate today as a standalone service within PayPal.

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