PayPal announced Thursday it plans to acquire iZettle, a Swedish firm that provides mobile card readers and other payment tools for small businesses. The payments giant will shell out $2.2 billion for iZettle, making it PayPal's biggest acquisition ever.
With iZettle's help, PayPal could expand its international footprint, and it could better compete against companies like Square for a spot in physical storefronts. Launched in 2010, iZettle has hundreds of thousands of customers in a dozen countries in Europe and Latin America. Once the deal closes, PayPal says it will gain in-store capabilities in the following 11 markets: Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Norway, Spain and Sweden.
"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," PayPal President and CEO Dan Schulman said in a statement. "iZettle and PayPal are a strategic fit, with a shared mission, values and culture--and complementary product offerings and geographies."
As recently as last week, iZettle said it was going public with the intent of raising 2 billion Swedish krona ($230 million USD) in additional capital. Its last valuation in December came in at $950 million. iZettle expects to generate approximately $165 million in revenue this year, with approximately $6 billion of total payment volume (TPV) expected to be processed on its platform. The company expects to reach profitability by 2020 on a standalone basis.
The deal is expected to close in the third quarter of 2018, at which point will operate "as an integral part of PayPal's merchant services offering," PayPal said. iZettle CEO Jacob de Geer will continue to lead the business, reporting to PayPal's COO Bill Ready. iZettle's management team will continue running the business.
As it moves into offering point-of-sale tools, PayPal is also planning to roll out traditional banking tools like debit cards that are geared to people who don't have access to financial services.