British regulators approved PayPal takeover of iZettle – -a payments start-up

Recently, the British competition and market authority (CMA) announced that PayPal’s acquisition of payment startup iZettle would not pose a competitive threat to the industry, so it approved the deal. Earlier, the UK CMA had provisionally approved the deal and conducted an in-depth second phase of investigation.

The CMA points out that both companies offer mobile point-of-sale (mPOS) devices, allowing companies to make “offline” payments via card readers connected to smartphones or tablets. The two companies are also actively pursuing “omni-channel” payment services in emerging markets, allowing companies to make “offline” and “online” payments through a single supplier.

The CMA’s first phase of the investigation has raised concerns that PayPal’s acquisition of its rival could reduce competition in the supply of mPOS equipment in the UK. This led to the transaction being submitted for a full second phase of investigation. Then, in April, the CMA announced that it temporarily believed the deal could be approved. Following consultation on the findings of this interim investigation, the CMA has now confirmed that the transaction has been approved.



The CMA reviewed a wealth of evidence relating to the rationale for the merger and what would be the respective business strategy of PayPal and iZettle in the absence of a merger. CMA also considers how consumers choose between newer mPOS devices and “traditional” point-of-sale devices.

Worldpay and Barclaycard, two payment service providers, currently have a market share of nearly 60 per cent and will continue to restrict the combined company.

Although iZettle and PayPal are the two biggest suppliers of mPOS devices, their customers are also willing to switch to “traditional” point-of-sale devices, according to the survey. The combined company will also face stiff competition from mPOS companies such as Square and SumUp, both of which have seen significant growth in business in recent years.

In terms of full-channel services, CMA found that iZettle was only slowly developing its products and would remain a marginal player for the foreseeable future. CMA also found that PayPal would be effectively constrained by other important competitors.

In September 2018, PayPal announced a $2.2 billion acquisition of Swedish payment maker iZettle, another record in the fintech sector. With this approval, PayPal will integrate iZettle’s team and products to provide more SMBs with affordable payment tools and services.