The Wall Street Journal, citing an interview with PayPal Chief Executive Dan Schulman, reported that the deal is part of PayPal’s strategy to create a more expansive offering to retailers that are hawking products in physical stores as well as online as they push back against competition from Amazon and others. Its the largest acquisition for the digital payment company, putting it in more competition with Square, which has long catered to the small businesses with physical locations. It’s a market the Wall Street Journal reported PayPal has largely ignored in the past. “Helping small businesses compete with the giants in the market really resonated for both of us,” Schulman said in the interview with the WSJ. By combining both companies’ services, PayPal can provide a “full-service, one-stop-shop solution” to existing and potential customers, the executive noted.
In addition to giving PayPal more of a foothold with small businesses, the acquisition of iZettle is likely to help the company offset the hit it’s expected to receive by losing eBay as a customer. Earlier this year eBay said it would manage payments from buyers and sellers on its website, prompting a sell-off in shares of PayPal. The WSJ noted that about one-fifth of its revenue last year came from eBay. The stock has since recovered from that.
PayPal is paying cash for iZettle and is aiming to have the deal closed in the third quarter. iZettle’s co-founder and CEO, Jacob de Geer, will reportedly continue on with iZettle, TechCrunch reported. “iZettle and PayPal are a strategic fit, with a shared mission, values and culture — and complementary product offerings and geographies,” said PayPal president and CEO Dan Schulman in a statement. “In today’s digital world, consumers want to be able to buy when, where and how they want. With nearly half a million merchants on their platform, Jacob de Geer and his team add best-in-class capabilities and talent that will expand PayPal’s market opportunity to be a global one-stop solution for omnichannel commerce.”