While Square continues to take small steps into Europe, a would-be homegrown rival has made its first acquisition to expand from mobile payments into a wider set of commerce solutions. iZettle — the Swedish mobile payments startup backed by the likes of Intel, American Express and Spanish banking giant Santander — has bought intelligentpos, whose cloud-based software lets businesses in the hospitality and other industries manage their inventory, loyalty programs and customer flow.
Terms of the deal are not being disclosed, iZettle CEO and co-founder Jacob de Geer told TechCrunch. The Edinburgh-based startup had raised only $770,000 in angel funding prior to its exit. De Geer said that intelligentpos will add another €500 million in processing volume to the €3 billion that iZettle already processes annually.
Intelligentpos is a cloud-based service and is complementary to iZettle in a couple of ways.
The first is in its feature set and how it is used by customers. Both take advantage of using generic hardware (in their case, an iPad or Android tablet); iZettle has built a service focused on simple and quick transactions, while intelligentpos is essentially focused on everything else around the business-customer relationship, with its biggest product to date focused on the hospitality industry.
The second way in which they complement each other is in their pricing: Up to now, iZettle’s revenues have come by way of taking a small percentage commission on each transaction made by the merchant (like Square, the basic cut is 2.75 percent). Intelligentpos, however, is a built on a SaaS model, “and that adds a different type of revenue stream we haven’t been working with up to now,” de Geer said.
Intelligentpos has up to now focused most of its efforts on the U.K. market, but de Geer said that under iZettle, the intention will be to take that elsewhere: iZettle has made a mark not only in Europe, where it competes against the likes of PayPal and SumUp/Payleven for small business customers (many of whom may not have had any payment card acceptance in the past because of the high rates charged by banks); but also Brazil and Mexico, by way of its strategic investment from Santander.
De Geer said that while it may have taken several years for iZettle to make its first acquisition, it won’t be the last. Like Square, the company is looking to go beyond its original payment roots as a route to more recurring revenue and a wider customer base. That’s also included services like business financing in the past, and de Geer said that today, the next target “could be anything.”
“It can be something in [payment] terminals to small business insurance,” he continued. “There is a lot out there right now ripe for consolidation. I know what all of them are looking for is a scalable way to acquire new customers and that is one of iZettle’s core strengths. And we are regulated, which means we can work with any financial service.”
The company, he added, is buying intelligentpos with a mix of cash and equity, bringing on employees as well as customers and tech. iZettle has to date raised just over $172 million, with the most recent tranche of $67 million coming a year ago and valuing iZettle at around $500 million, according to sources close to the company.