iZettle Announces Sale to PayPal at the Eleventh Hour31st May 2018
iZettle, the Swedish payments company founded in 2010, has sold to PayPal for $2.2 billion, placing any plans to IPO on hold.
iZettle is a payments facilitator used primarily by smaller merchants in Europe and Latin America. iZettle aims to simplify payments as much as possible, reduce time to market, potentially offer a joined-up solution by combining Point of Sale (POS) and Enterprise Resource Planning (ERP) functions, and is on a “…mission to help small businesses succeed in a world of giants” according to its website.
iZettle uses Elavon and Ingenico Group in the background as card processors, but relaxed rules from card networks mean very small merchants don’t always even need their own MID when using a payment facilitator like iZettle. In return, pricing is a percentage fee per transaction, with a one-off purchase of the terminals – making it affordable for many small business owners and entrepreneurs.
For small merchants, who often favor innovative payment facilitators, this could mean either a reduction, or an increase in competition, dependent upon where you are geographically. In the UK, merchants are likely to see the end of PayPal’s own SME range, which currently uses Worldpay and Global Payments. However, in other markets, most notably the U.S., this could inject significant competition into the market and pose a threat to current market-leader, Square.
For larger merchants, this is a “watch this space” development. Prior to the acquisition, iZettle had hinted at its intention to pursue slightly larger merchants more actively, but a meaningful change would be required to compare its model with most major card processors. Given the recent launch of their eCommerce offering, PayPal may look to pair iZettle’s capabilities with Braintree and create an innovative omni-channel offering to compete with companies like Adyen.
As with all mergers, acquisitions and joint ventures in the payments industry, merchants must keep up to date with these changes and ensure they understand how any developments will affect their operations and relationships. We’ll keep you updated with any further developments as they occur.