PayPal's $2.2 Billion Payments Acquisition Is Its Latest Swipe at Square

Jacob de Geer CEO and cofounder of iZettle. 
 	
Yvonne Åsell  SvD  TT

According to TechCrunch, iZettle CEO Jacob de Geer will continue to manage the iZettle operations under PayPal's COO Bill Ready.

US-based PayPal, a unit of eBay, said that its biggest acquisition to date would strengthen its platform for handling payment transactions at small businesses, particularly in Europe and Latin America. The deal has been finalized by the company and PayPal would be paying $2.2 Billion for the acquisition.

The company sells card readers that connect to smartphones or tablets, helping small companies to avoid some of the prohibitive costs associated with taking card payments.

The acquisition will help PayPal to expand its in-store presence and strengthen its platform to better serve small businesses across the globe. A merger would catapult PayPal into hundreds of thousands of brick-and-mortar storefronts globally in an effort to bring its digital payments tool into physical retailers and compete with companies, like Square.

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.

Buying iZettle will expand PayPal's reach into shops in Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden. It has plans at an advanced stage to become a public company. The company is expected to process payments worth $ 6 billion in 2018 and generate $ 165 million in gross revenue.

Given that iZettle is in 12 countries compared to PayPal's 200, the latter can certainly help it deal more quickly with the various regulatory issues needed to expand into new geographies. Upon closing, iZettle will become the European center of excellence for PayPal's in-store product and services offerings. The deal will be an all-cash deal and is expected to be closed by third quarter of the current financial year.

JPMorgan Chase & Co. was sole financial adviser to iZettle, while PayPal worked with Evercore Inc.

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