PayPal acquires Swedish payments startup iZettle

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

Founded in Stockholm in 2010, iZettle started out selling credit and debit card readers that could be plugged into smart phones and tablets.

While PayPal predominates as an alternative payment mechanism for websites and other online merchants, it lacks the kind of hardware and infrastructure to enable small business owners to take card payments via mobile technology. While PayPal does not have a hold in these countries, iZettle has been a trusted name for some time. This year, it'll generate $165 million in 2018, and process some $6 billion worth of payments.

Under the terms of the deal, Zettle CEO Jacob de Greer and the company's management team will continue to lead the business, which expects to process United States dollars 6 billion in payments in 2018 and have gross revenues of USD 165 million.

PayPal said that its biggest acquisition to date would strengthen its platform for handling payment transactions at small businesses. The deal will give PayPal a bigger footprint in hundreds of thousands of stores, and bring it in even more direct competition with Square.

The prospect of battling Square and PayPal for the hearts and minds and wallets of retailers - and with far fewer financial resources - meant iZettle executives would have had to do one hell of a selling job to make the IPO a success, let alone ensure the company would continue growing and reach profitability.

The acquisition, which is the largest in PayPal's history, will potentially catapult the company into hundreds of thousands of bricks-and-mortar retailers around the world. The combination will give PayPal in-store capabilities in 11 markets including Brazil, Nordic countries, France, and Mexico.

It was less than a month ago when iZettle announced it would go public, with hopes that new funding would help the company grow and expand. Upon closing, iZettle will become the European center of excellence for PayPal's in-store product and services offerings.

The company is still operating at a loss, according to IPO documentation. J.P. Morgan Securities plc is acting as sole financial adviser to iZettle, while Gernandt & Danielsson is acting as its legal adviser.

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