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PayPal Closes Its Largest Acquisition—iZettle

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PayPal absorbs iZettle

PayPal (PYPL) has completed the acquisition of iZettle. In May, PayPal announced a deal to buy iZettle, saying it would spend about $2.2 billion toward that transaction. At $2.2 billion, iZettle is PayPal’s largest acquisition and one that helps PayPal expand in the lucrative POS (point of sale) payments market.

In addition to other products, iZettle sells payment card readers that let small businesses accept credit card payments. It has a strong presence in Europe and South America.

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Competition with Square in the POS market

The acquisition of iZettle is expected to give PayPal a boost in its competition with Square (SQ) and others in the POS payments market. Square also builds payment card readers and has recently taken to creating payment platforms for specific industries. Its Square for Restaurant platform is designed specifically for the food service industry.

In addition to processing payments for merchants, PayPal, Square, and Amazon (AMZN) also lend to their business customers, with each having extended more than $3.0 billion in business loans over the last four to seven years. In July, eBay (EBAY) noted that it had signed Square to extend small loans to its sellers.

PayPal posted $3.9 billion in revenues

PayPal’s revenues increased 23.0% YoY (year-over-year) to $3.9 billion in the second quarter, compared to YoY revenue growth of 47.8% for Square and YoY revenue growth of 39.3% for Amazon. LendingClub (LC) and First Data Corp. (FDC) grew their revenues by 43.6% and 10.3% YoY, respectively, in the second quarter.

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