Online payment giant PayPal is making power moves with the announcement of its $2.2 Billion acquisition of a Swedish payment startup called iZettle, amid growing competition from a rival firm known as Square.
PayPal has confirmed that it plans to acquire the Swedish payment firm as part of its plans to expand its presence in Europe and South America. The online payment giant has been working on boosting its reach in brick and mortar stores. The $2.2 billion deal for iZettle will be the biggest acquisition that PayPal has made so far.
The acquisition talks between the two companies are already ongoing and the deal should be finalized in the third quarter of 2018.iZettle will become part of PayPal once the deal is completed but Jacob de Geer, the CEO of the Swedish payment startup will stay on board to run the company along with other members of iZettle’s executive team.
The new deal has also been announced just a few days after the Swedish company announced that it plans to launch an IPO as part of its plans to expand its business. The startup planned to raise as much as $227 million on the Stockholm Nasdaq and this would have raised its valuation to around $1.1 billion. However, some reports claim that PayPal and iZettle have been in talks for years and that the mention of the ICO played a role in making PayPal speed up the talks.
iZettlehas a strong presence in the UK which makes it a strategic acquisition which should play out well towards securing a stronger presence in the region. This is also happening at a time when rival payment firm Square has been gaining traction in the UK market. The deal will thus allow PayPal to handle the competition.
iZettle currently runs its operations in 12 markets including Latin America, Mexico, and northern Europe. This is great for PayPal because it does not have an online presence in those regions and thus the acquisition of the Swedish startup will provide direct access. Meanwhile, PayPal has been busy trying to expand its point-of-sale payments in the U.S and also in the global market and this newly announced acquisition aligns with its objectives.
It is of utmost importance for PayPal to keep expanding its presence to keep up with the growing competition in the digital payments industry. Its focus has particularly shifted towards small businesses since they play a large part in driving growth in the global economy.