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PayPal is buying payments start-up iZettle for $2.2 billion ahead of IPO

Payment machine

US-based Paypal was formerly part of eBay, but is now a standalone digital and mobile payments company.

PayPal Holdings Inc (PYPL.O) is in advanced talks to buy iZettle AB (IPO-IZET.ST) in a deal that could value the Swedish fintech at around $2.2 billion, the Wall Street Journal reported on Thursday, citing sources familiar with the matter, APA reports quoting Reuters.

iZettle CEO Jacob de Greer said: "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". However, all of them will be now reporting to Paypal's COO Bill Ready.

The acquisition - PayPal's largest ever - will expand PayPal's in-store presence, enabling it to reach small businesses around the world through its merchant services offering. iZettle will become the European centre of excellence for PayPal's in-store product and services offerings.

"When we think about the combinations and capabilities of PayPal and iZettle", Schulman added, they "set us apart from anyone else".

iZettle, which is based in Sweden, said last week it would list an IPO on the Nasdaq in Stockholm sometime this year, and said at the time it would not be pursuing a sale as alternative to an IPO.

The deal will have forced PayPal's hand for years.

iZettle, best known for offering small payment machines to small merchants, ranks among the rivals of Square, founded by Twitter CEO Jack Dorsey.

When complete, the acquisition of iZettle will mean PayPal has an in-store presence in 11 markets in Europe and Latin America.

Paypal's last big acquisition was in 2015 when it acquired money-transfer startup Xoom for almost $890 million. Since Paypal now does not have a strong offline presence in these markets, it will look to leverage on iZettle to penetrate into these markets.