Today iZettle, one of the several Square-like mobile payments companies in Europe, announced that it was expanding its Series B round of €25 million and adding American Express as its newest investor. iZettle and AmEx are not disclosing the value of the new investment. It is joining Greylock, Northzone, MasterCard, SEB Private Equity in the round, which was originally €25 million ($31.4 million). Series A investors in iZettle included Index Ventures and Creandum. The expansion of the Series B is a sign of how competition in the mobile payments world continues to heat up and those looking to make headway are ramping up their financial positions to meet the demand.
iZettle says it will use the funding for product development and expansion into new markets. Among those, the company is expected to make a full commercial launch in the UK in November. Up to now, it has been operating a closed beta with 4,000 small businesses in the country. With the launch, iZettle is also going to announce a partnership with a major UK retailer.
This is a big move for AmEx, in that it is putting its money behind iZettle rather than many of the other European contenders to own the space of mobile payments based around a dongle attached to a mobile device. Others include Payleven from the Sawmer brothers’ Rocket Internet, SumUp, and MPowa.
It is not yet clear whether this is a straight financial investment or also a strategic one: AmEx has developed its own digital payment services in the form of Serve and has partnered with Isis in the U.S. to integrate that into its mobile wallet.
It also moves AmEx further into what it might do in mobile payments in Europe longer term. “The payments landscape is changing rapidly and we believe iZettle’s solution will play an important role in helping to further enable commerce – especially in small merchant segments that have historically relied on cash – by delivering a smart and convenient way for small businesses to accept consumer payments,” said Werner Decker, Senior Vice President, Merchant Services Europe at American Express, in a statement.
iZettle has slowly been rolling out across Europe, with services in its home market of Sweden, Finland, Denmark and Norway, as well as the UK beta. When iZettle originally announced its Series B round, CEO Jacob deGeer told TechCrunch that part of the intention was to use it to expand to new markets. “Our priority is to get the UK fully launched, and then look at other major markets like Spain, Italy, France and Germany to continue building up our transaction volume,” he told TechCrunch at the time. “We’re not interested in the U.S. They’re doing really well with Square and others.”
As with companies like Square and Here from PayPal, the idea with iZettle is to offer a way for smaller merchants that had never accepted cards for payments, to use their iOS or Android smartphones or tablets, equipped with an attachment, to do so. Using iZettle, each transaction on MasterCard, Visa, Diners Club and AmEx is charged a flat 2.75% commission.
Square, meanwhile, has been doing some impressive fundraising of its own. It picked up a $200 million Series D round in September. At the time it said that it would be putting some of that towards an international expansion that would begin before the end of this year. While the company has not specified where or when that will be, many believe that the first steps will be in Asia rather than Europe, leaving companies like iZettle and the rest to continue to duke it out here.
But while iZettle has the endorsement now of two major credit card companies — MasterCard and AmEx — it has also fallen afoul of the third biggie, Visa. The comapany’s European operation, Visa Europe, in July cut off access to its payment network for iZettle in almost all of its markets (Sweden excepted).
The claim was that iZettle’s chip-and-signature system (you put your card into the dongle to read the chip, and then you sign on the smartphone screen to verify your identity) did not meet its standards for payments.
iZettle has said that it continues to work with Visa on finding a solution that will work for both. It’s not clear what that solution will be, but others like Payleven have been developing special keypads that work with their dongles to enter 4-digit security codes for verification.
As all of that has been happening, iZettle also has been making other product headway, expanding to Android (in addition to iOS-based services) and launching an API for developers to integrate iZettle’s payment platform directly into their apps, something that even trailblazing Square has yet to launch.