Paypal buys Swedish Izettle
Less than two weeks before their IPO, Swedish payment company Izettle gets an offer they can't refuse from Paypal.
Izettle is founded in 2010 by Jacob de Geer, who was one of the first employees at Tradedoubler, and Magnus Nilsson. They had both promised their wives not to start new time-consuming projects, but feel that Jacob's idea is too good to let go. Ironically, he gets the idea from his wife. She sells reading glasses and after coming back from a trade show she complains about how much more she could have sold there, had there only been an easy way for her to accept credit card payments. But a card terminal from the traditional banks is way too expensive for smaller companues, both application fees and running fees are high.
Jacob de Geer things this must be possible to work around by making a cell phone into a card terminal, and is surprised to find that there is no European company that have solved this, even though small companies represent 30-40 percent of the GDP. He smells an incredible opportunity, contacts the businessman Magnus Nilsson, and they decide to go for it.
They first develop an adapter to turn a cell phone into a card terminal, and later an actual terminal connected to the mobile phone. A seller can then let customers pay with credit cards, and sign digitally. The hardware is given away for free, and each transaction costs 1.85% which Izettle charges, much lower than traditional bank fees.
The service quickly becomes popular in Sweden, and hundreds of millions of SEK are raised in investments to grow quickly and launch in more countries. In 2018 they face an IPO when Paypal knocks on their door.
The American payment giant offers 2.2 billion dollars for Izettle, and the IPO is cancelled. "Given the size of Paypal we see this is a great way to give Izettle super powers compared to the IPO", says Jacob de Geer, who continued as CEO for the company in an interview.