PayPal Holdings Inc (PYPL.O) has agreed to buy Swedish financial technology startup iZettle for $2.2 billion in the U.S. online payments provider’s biggest ever acquisition.
The deal will allow the Californian company to expand into the retail payment terminals business in international markets, where it will compete with Silicon Valley firm Square Inc (SQ.N) founded by Twitter (TWTR.N) CEO Jack Dorsey.
Stockholm-based iZettle, which had advanced plans to go public, offers small businesses a miniature credit card reader that turns smartphones or tablets into payment registers.
It is present in 12 countries in Europe and Latin America and offers other services for managing small businesses.
By joining forces with PayPal, which operates in 200 countries, iZettle will be able to accelerate its expansion, including into the United States, the companies said.
Shares of PayPal rose 2.4 percent on Nasdaq, and Square was up 0.05 percent on the New York Stock Exchange shortly after midday.
In most of the countries where it is active, iZettle drives more traffic through its sites than Square does, data from mobile and web traffic measurement firm SimilarWeb shows.
Since separating from online marketplace eBay (EBAY.O) in 2015, PayPal has reshaped itself from mostly processing online transactions for its parent company to offering a suite of digital payment services.
These range from lending to small businesses to facilitating money transfers between merchants and customers.
PayPal has been expanding aggressively through acquisitions and partnerships with large banks and technology firms including Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N), Apple Inc (AAPL.O) and Facebook Inc (FB.O).