PayPal Holdings Inc. (PYPL) has decided to buy iZettle in a transaction valued at $2.2 billion, enabling the company to further strengthen its foothold in the retail payment business globally, where it compete with Silicon Valley firm Square Inc (SQ).
Shares of PayPal rose 2.02 percent to $80.79 on Friday following the news.
iZettle is a Swedish financial technology startup that offers a miniature credit card reader to small enterprises that turns smartphones into payment registers. The company also provides other services for running small businesses. It is currently operating in a dozen countries across Europe and Latin America.
In the markets where it provides services, iZettle pulls more traffic via its sites than Square does, according to market research firm SimilarWeb. The Stockholm-based company’s Chief Executive Officer Jacob de Greer and its management team will keep running the business following the deal. The company expects to process payments of $6 billion this year that would generate gross revenue of nearly $165 million.
The merger with PayPal will help iZettle to speed up its expansion in international markets, particularly in the United States.
PayPal separated from eBay (EBAY) in 2015, and it has been reforming itself since then. It now offers a range of digital payment services, instead of just processing online transactions for its parent company. The services range from lending to small enterprises to helping money transfers between customers and vendors.
PayPal has been growing aggressively with the help of acquisitions and tie-ups with big financial institutions and tech firms such as Bank of America, JPMorgan Chase & Co, Apple Inc and Facebook Inc.
iZettle is the latest in a series of successful Sweden-based start-up firms that have been acquired by bigger U.S tech companies instead of going public.