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PayPal Keeping iZettle Separate for Now

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Sep. 27 2018, Updated 6:32 a.m. ET

PayPal spent $2.2 billion on the transaction

Although PayPal (PYPL) has completed the transaction to acquire iZettle for about $2.2 billion, the complete absorption of the business is expected to be delayed for some time. The UK’s antitrust regulator, the Competition and Markets Authority (or CMA), has opened a probe into PayPal’s acquisition of iZettle, a Swedish payments company whose card readers enable even small traders to accept card-based payments.

The probe by the CMA is to assess whether the PayPal–iZettle merger would reduce competition in the UK market. iZettle has operated since 2010, serving about half a million merchants across 11 countries, mostly in Europe and South America.

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PayPal competing with Square in the UK

PayPal is a leading global digital payments provider that operates in more than 200 countries and serves about 250.0 million customers. In addition to its primary business of processing payments, it also extends loans to businesses and consumers. 

PayPal’s competitors in the UK payments market include Square (SQ), which is in the early stage of its global rollout. In addition to the United States and the UK, Square is available in Canada, Japan, and Australia. Amazon (AMZN) also processes payments and extends loans to its merchant customers in addition to operating an online marketplace.

Alibaba (BABA) and Tencent (TCEHY) are also in the race for a slice of Europe’s digital payments market. Alibaba launched its Alipay service in Europe in 2015 and Tencent introduced its WeChat Pay service in the region last year.

PayPal said that the iZettle brand and operations are expected to be separated until the UK’s CMA completes its probe of the deal.

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