Index To Lead €10 Million-Plus Round In European Square Competitor iZettle

Index Ventures is on a roll. The company is leading Dropbox’s $4 billion valuation round, and today, we’ve heard that the fund is making a major investment in Europe’s Square competitor iZettle. We’ve confirmed the funding with a source close to the company. We’ve also heard from a source the round is 10 million Euros ($14 million) plus.

iZettle, which is based in Sweden, launched earlier this year as a card reader that allows users to take credit card payments from chip-enabled credit or debit cards. The free device plugs into the iPhone’s port, and you download companion app from App Store and sign up for an iZettle account.

To process a transaction you simply plug in the chip-card reader, enter the amount and a short description of the item you are selling, take a picture and insert the buyer’s credit card. The reader scans the chip in the car,  you tap “Pay”, let your customer sign on the device screen to confirm the purchase  and the app will send a receipt to his or her email address. iZettle will deposit funds in a merchant account by the next business day.

The experience is very similar to that of mobile payment disruptor Square, but instead of a swiper, iZettle works with chip-enabled cards, which are popular in Europe. The iZettle chip-card reader and app are free but the company charges per transaction. The price per transaction varies between countries and iZettle’s first market, Sweden, it is approximately €0.16 per transaction plus 2.75% per transaction. Square, which only works in the U.S. for now, actually waived its transaction fee recently and charges 2.75% per transaction.

In terms of security, iZettle is approved by Europay, MasterCard and VISA (EMV). The startup says that no sensitive data is ever stored on the mobile device, and all data traffic is encrypted.

It’s no surprise that Index is betting on iZettle. Mobile payments is a fast growing space and it’s getting competitive. Square just raised $100 million and is valued at over $1 billion and has international ambitions as well. VeriFone and Intuit are also playing in the space and new players are popping up everywhere.

As the Wall Street Journal reported earlier this year, there are over 20 million small businesses that can be empowered with mobile payments readers. It’s a huge market, and soon there will be a company that is going to dominate mobile payments in Europe. Clearly Index is betting that iZettle will be that company.