PayPal is looking forward to establishing its position as a financial technology titan, so the fact that they made a huge acquisition this week doesn’t really come as a surprise.
According to CNBC, the company bought Sweden-based iZettle for a total of $2.2 billion. The European start-up is basically a rival to Square, the payments company led by Jack Dorsey, Twitter’s CEO, but competes with them just in the United Kingdom.
Aiming small and medium-sized businesses
iZettle produces small wireless chip readers, as well as a few more payment processing products, and recently announced a new product, which can be used by small businesses to build their own online stores with ease.
After the acquisition, the company’s won’t be looking forward to obtaining its own listing on the stock market. They have spent more than a year trying to achieve this, as a side note, as CEO Jacob de Geer revealed.
“I think it’s important to clarify that since we started the company in 2010 we’ve been doing a lot of work with PayPal and the team at various capacities in terms of cooperation and partnerships,” De Geer said.
“We’ve been struggling all along to get to the vision we’re aiming for in terms of helping small businesses and competing with the giants, and PayPal has in the area of 20 million merchants whereas iZettle has 500,000,” he added.
Some serious profit, coming soon
Until now, the company didn’t manage to generate any profit, but they want to achieve positive consolidated earnings before interest, taxes, but also depreciation and amortization, everything until 2020. They are looking forward to closing deal with important merchants by the time the listing will be possible.
As for PayPal, the main reason to make this acquisition was their desire to increase its payments presence among actual, physical retailers. They are also planning to expand iZettle’s international presence, as they are currently operating in just 12 countries in Europe and Latina America. PayPal, on the other side, is present in more than 200.
They payment processor is used by several big retailers around the world, like BestBuy or Walmart, and has a market value of almost $100 billion.