PayPal Agrees to Acquire iZettle for $2.2 billion

PayPal announced they have signed an agreement to acquire iZettle for $2.2 billion, a leading small business commerce platform in Europe and Latin America.

This is the largest acquisition in the company’s history and significantly expands PayPal’s in-store presence around the world.

PayPal believes this will strengthen their platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment.

“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.

The combination of PayPal and iZettle brings together iZettle’s in-store expertise, digital marketing strength and mobile point-of-sale technology with PayPal’s global scale, online and mobile payments leadership and trusted brand reputation to support merchants and consumers in more ways.”

Dan Schulman, President, and CEO, PayPal

Stockholm based iZettle was founded in 2010 by Jacob de Geer and Magnus Nilsson with a mission to support small businesses compete better against bigger retailers.

For 2018 the Swedish company expected a total payment volume of about $6 billion with expected gross revenue of about $185 million. PayPal disclosed iZettle was not profitable and currently EBITDA profitability is expected by 2020.

iZettle has nearly half a million merchants across 12 countries and two continents using their commerce solutions help expand their businesses.

Upon closing, PayPal states they will gain in-store capabilities in 11 markets, near-term in-store expansion opportunities into other existing PayPal markets, and the acceleration of omnichannel commerce solutions in Australia, UK, and the U.S.

Once the acquisition closes, iZettle CEO and co-founder Jacob de Geer will continue to lead iZettle, reporting to PayPal COO Bill Ready.

PayPal Buys Another Competitor?

iZettle offers some overlapping financial solutions as PayPal. It will be interesting to watch if PayPal will eventually fold iZettle into its core platform.

PayPal has kept Venmo development moving forward and still operates that business under the Venmo name, despite significant overlap with PayPal’s core business.

READ MORE: Venmo Now Accepted at Millions of Retailers

It is a bit of an unusual strategy to keep buying similar companies but maintain the businesses operating under their original brands. But iZettle’s focus is in-store payments, so that is an area PayPal needed to beef up a bit.

PayPal did state to investors that this transaction is a highly complementary fit as it combines iZettle’s best-in-class in-store capabilities with PayPal’s mobile and online value proposition and merchant services offering.

Bottom line, the company gains market share in payment processing and may share network payment processing resources among the different payment platforms.

No IPO?

This news comes only days after iZettle revealed it was intending on selling shares and launching an IPO by listing on Nasdaq Stockholm.

“…we were preparing the company for a potential IPO. But plans sometimes change. Late in the IPO process, PayPal got in touch and showed a serious interest in iZettle.”

Jacob de Geer, CEO & co-founder, iZettle

It appears PayPal’s offer was a better deal for existing investors than taking the company public.

Do you use iZettle and how do you think it compares to PayPal? Head over to our Facebook Discussion Group or use the comments section below.

PayPal

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