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What’s Next for PayPal as Britain Escalates Its iZettle Review?


Dec. 17 2018, Published 12:57 p.m. ET

Deeper review could slow PayPal’s plans for iZettle

Britain’s antitrust regulator, the CMA (Competition and Markets Authority), is referring PayPal’s (PYPL) takeover of iZettle for a thorough review, a process that could take months to complete and could throw the deal’s fate in the United Kingdom into uncertainty.

The regulator said it was taking the step because PayPal had failed to demonstrate how it would address concerns related to the deal’s impact on the competition.

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iZettle is a Swedish payment technology company with a footprint in several countries in Europe, including the United Kingdom. It makes payment card readers that enable even small traders to accept credit card payments. PayPal acquired the business for $2.2 billion in a transaction that closed in September, but it decided to delay the complete absorption of iZettle to allow the United Kingdom to conclude its antitrust review of the deal. With the CMA escalating the deal’s review, PayPal could be forced to further delay its absorption of iZettle.

Final decision expected by May 21

As the PayPal-iZettle deal moves toward an in-depth review, the CMA expects a final decision on the matter to come by May 21, 2019.

The takeover of iZettle is viewed as part of PayPal’s attempt to diversify its market by expanding into the offline payments space and to stimulate its growth amid increasing competition from Square (SQ). iZettle is PayPal’s answer to Square in the retail point-of-sale market.

PayPal’s revenue rose 14%

PayPal generated $3.7 billion worth of revenue in the third quarter, representing an increase of 14% YoY (year-over-year). Square, Tencent (TCEHY), and Alibaba (BABA) grew their third-quarter revenues 51%, 24%, and 54% YoY, respectively. Amazon’s (AMZN) revenue jumped 29% YoY in the third quarter.


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