PayPal recently announced that they have closed the deal with iZettel for $2.2 billion dollars and we asked Sarah Grotta from Mercator Advisory Group about her thoughts on the acquisition.
This is a much bigger acquisition then what PayPal has done in the past. If you think about their other big acquisitions such as Xoom or Braintree, they were in the $800 to $900 million range and this is a $2.2 billion dollar acquisition for iZettle who doesn’t make any money yet. PayPal must be very confident in their technology and the small business market where they play.
Beyond that, iZettle fits in very well with their overall mantra- you’ll hear them repeat frequently- which is to democratize payments for consumers and for businesses. iZettle offers capabilities for small and micro businesses that are typically difficult for organizations of that size to attain.
So for example, they can offer omni-channel capabilities so that small and micro businesses can offer customers a seamless experience across in-store or online and in-app channels.
PayPal has always had a strong merchant businesses and I think this acquisition really just shores that up. It gets them into Europe, it gets them into Latin America, and it gets them to a point where they can much more effectively compete against organizations like Square for the small business market.
I really see this acquisition not outside of where they’ve been going, but strengthening their position and just extending it a bit to new markets where their presence isn’t as great and adding some new capabilities that I’m sure will find their way to the US.