PayPal is dipping deep into its pockets to acquire iZettle, a European startup and financial technology firm that sells mobile credit card readers, for $2.2 billion, the company announced today. It's obviously a massive purchase and one that seems to have excited investors—PayPal's stock jumped around 2.3 percent following news of the planned acquisition, and it's still early in the trading day.
"Small businesses are the engine of the global economy and we are continuing to expand our platform to help them compete and win online, in-store and via mobile," said PayPal President and CEO Dan Schulman. "iZettle and PayPal are a strategic fit, with a shared mission, values and culture—and complementary product offerings and geographies. In today's digital world, consumers want to be able to buy when, where and how they want."
iZettle is the leading small business commerce platform in Europe and Latin America. There are nearly half a million merchants that use its payment platform. By purchasing iZettle, PayPay instantly gains in-store payment processing in just shy of a dozen markets, including Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Spain, and Sweden. There are also plans to expand soon into the US, UK, and Australia.
"Combining our assets and expertise with a global industry leader like PayPal allows us to deliver even more value to small businesses to help them succeed in a world of giants," said iZettle CEO Jacob de Geer. "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."
This is a big move for PayPal, and is likely motivated in part by losing eBay as a customer. The world's largest online auction site announced earlier this year that it was moving away from PayPal as its primary partner for processing payments in its marketplace, and had instead inked an agreement with Ayden, an e-commerce company headquartered in Amsterdam. It is a multi-year transition.
iZettle estimates process approximately $6 billion in payment volume on its platform this year, en route to generating gross revenues of $165 million. The company has managed to grow its revenue 60 percent from 2015 to 2017.
This is the largest transaction in PayPal's history. Barring any snags along the way, the deal is expected to close in the third quarter of this year. Once it's finalized, PayPal will compete with companies like Square in the payment processing market.
Thumbnail/Top Image Source: PayPal