PayPal has just made it’s single largest acquisition ever, with the 2.3B, all-cash purchase of e-commerce payment provider, iZettle.This, despite being seen by many as mundane, is a significant play for PayPal, who have found themselves under siege of late by competitors such as Square and Stripe, who have been chipping away at PayPal’s business from the bottom up.
iZettle has substantial penetration in the red-hot small business market, and also – perhaps more importantly – has many offices and a significant client base in mainland Europe, a location that PayPal has never focused on significantly.
The most poignant component of the transaction is the nature of the sale; a cash-only transaction could signify that PayPal intends to absorb the business into the larger organisation, and make use of iZettle’s systems as extensions of the core PayPal system. Those systems will include hardware, such as easy-to-use card scanners and point-of-sale systems, along with some impressive software, again, targeted at small businesses.
In a few years time, this may be seen as a masterstroke by PayPal who, with the addition of a website development protocol, would become the very first total small-medium business infrastructure supplier in the world. With hardware and software that can take multiple payments from all potential customers, either online or off-line, and able to be scaled as the business grows, PayPal would become even more of a force to be reckoned with. It may also be a sign that PayPal intends to let consumer to consumer transactions go by the wayside, something that many insiders have been arguing for since the advent of competitors in this area.
What will be interesting now, is how Stripe and Square respond. Will they doubled down on smaller transactions, or strike PayPal where it hurts, at the commercial level?