The all-cash deal will save iZettle from going through all the bother of a stock market listing; the Swedish company had flagged its intention earlier this month to float on the Stockholm Nasdaq exchange.
"This combination brings together iZettle's in-store expertise, recognised brand and digital marketing strength with PayPal's global scale, mobile and online payments leadership, and trusted brand reputation,” said Dan Schulman, PayPal’s president.
PayPal is typically strong in the online arena, particularly on eBay (which used to own the company), and the deal with iZettle will strengthen its presence in bricks-and-mortar establishments, particularly in Europe.
iZettle, which provides mobile card readers and offers digital payment services to small businesses, is used by almost half a million merchants.
“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,” Schulman said.
Jacob de Geer, the chief executive officer of iZettle, will stay on-board to lead the business, reporting to Bill Ready, the chief operating officer of PayPal.
“Combining our assets and expertise with a global industry leader like PayPal allows us to deliver even more value to small businesses to help them succeed in a world of giants,” de Geer said.
Big news - iZettle to join forces with PayPal. Becoming a part of the PayPal family will give us and our merchants an amazing opportunity to grow and expand. Excited to get to work with Dan, @williamready and team! Read my thoughts here: https://t.co/XG6P45jM44 pic.twitter.com/9s0It2ycsH— Jacob de Geer (@jacobdegeer) May 17, 2018
The acquisition is the largest in PayPal’s history and is for a company that is still making a loss. In its documentation filed ahead of its proposed stock market listing, iZettle made an underlying loss (Lbitda) of 73mln krona, or roughly £6.18mln or US$8.36mln, in the first three months of 2018.