PayPal (PYPL) to acquire Swedish based payments company iZettle for $2.2 billion to expand its geographical footprint and to enter the market for on-premise payment solutions. Seen as the European equivalent of the US based company Square, this acquisition creates many new industry dynamics within the payments industry.  The company’s devices and platform are being used by an estimated 500,000 businesses in Europe and the Americas. This will help PayPal expand into a number of markets where it has little or no presence, while also giving the company a way into hundreds of thousands of physical stores and smaller brick-and-mortar retailers worldwide.

The Stockholm based fintech start-up established in 2010 had filed for an IPO earlier this month, hoping to raise an estimated $227 million, valuing iZettle at about $1.1 billion. Initially, co-founder Jacob de Geer said the company wasn’t interested in being acquired, but reconsidered after a meeting with PayPal executives.  iZettle previously raised $343 million through 12 rounds of funding.  The list of investors included many major European venture funds including Index who lead the Series A, Northzone, Creandum, 83North, Dawn Capital>  The company also raised fund from a number of corporate investors including American Express, Master Card and SEB Private Equity who came in to the Series B, and Intel and Santander Innovations who entered in later rounds.

PayPal required a similar amount of funding at $217 million prior to its acquisition by eBay in 2002.  iZettle represents the latest but by far the largest in a long series of acquistions by PayPal who has complete 14 since 2000.  They are also a very active investors having complete 25 investments since 2007.  Most are in the US but European investments include Raisin based in Berlin and cloud.IQ based in London.  cloud.IQ is an AI and machine learning based automated conversion rate optimisation platform for e-commerce businesses. Powered by real-time data and analytics, the cloud.IQ technology works to optimise the customer journey without requiring any website changes, significantly growing online revenue.