PayPal's $2.2 Billion Payments Acquisition Is Its Latest Swipe at Square

PayPal Holdings is buying Swedish small-business platform iZettle for $2.2 billion to expand in Europe and Latin America and increase its presence in brick and mortar stores.

“Small businesses increasingly want a full suite of capabilities across channels, a one-stop stop,” Dan Schulman, chief executive officer of PayPal (pypl), said in an interview. “IZettle was the perfect fit in many ways.”

The deal is the biggest ever for San Jose, Calif.-based PayPal and will help it compete with Square (sq), which made a name for itself by helping small businesses and food-truck vendors conduct credit card and mobile transactions. Founded in 2010 by Jacob de Geer and Magnus Nilsson, iZettle also started out with a mobile-phone gadget for accepting credit card payments. It has since expanded into software and financing services to support small businesses.

Earlier this month, iZettle announced plans for an initial public offering and de Geer specifically said the company had no interest in a so-called dual-track process that would consider a sale as an alternative to the listing.

In an interview on Thursday, de Geer said that he changed his mind after meeting with the executive team at PayPal. He was convinced that his company could continue to grow substantially under the new owner and that their cultures would be aligned. He will continue to lead iZettle.

PayPal said it hopes to be able to reap the advantages of the merger almost immediately in certain areas, and that the financial benefits will kick in shortly after the deal closes, expected in the third quarter. According to a statement by the two companies, iZettle expects to generate gross revenue of about $165 million in 2018, with roughly $6 billion of total payment volume expected to be processed on its platform.

“When we think about the combinations and capabilities of PayPal and iZettle,” Schulman added, they “set us apart from anyone else.”

JPMorgan Chase & Co. was sole financial adviser to iZettle, while PayPal worked with Evercore.

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