The mobile payments market is heating up, with several new players entering this segment. The most successful of all these start-ups is Square, the tech-start up founded by Twitter co-founder Jack Dorsey. In Europe, iZettle, a Swedish company with headquarters in Stockholm, is an exciting player in this segment.
Established in 2010 by serial entrepreneurs Jacob de Geer and Magnus Nilsson, iZettle has operations in the European nations of Sweden, Norway, Denmark, Finland, UK, Spain, as well as Latin American markets like Brazil and Mexico. It targets small and medium sized businesses and tradesmen like plumbers and electricians, who do not have the turn-over to support the infrastructure required for a traditional card based system. It provides them the flexibility to receive card payments through the iZettle card reader and free app for iOS and Android.
The competitors of iZettle include Payleven, SumUp, PayPal and Square. iZettle has smartly distinguished itself from its competitors through its unique pricing policies and value added services. Compared to Square and Payleven, who charge a flat fee of 2.75% per transaction, iZettle offers a flexible pricing service called Smart Rate, under which the ceiling per transaction is 2.75%, and depending on the volume of business, the price can fall to as low as 1.50% per transaction. The service is currently available only in UK, but the company plans to roll it out to other countries soon. iZettle also provides free analytics to its customers, which includes details about the most loyal customers, weekly and monthly best - selling products, sales over time and average sales per customer. These features differentiate iZettle from its competitors. As noted by CEO Jacob de Geer, “The exciting stuff isn’t payments, the exciting stuff is all the things we’re building off the back of that”. Because of the flexibility of its services and innovative features, iZettle is sometimes referred to as the “Square of Europe”.
iZettle accepts all the major credit cards in Europe, which are EMV (Europay, MasterCard and Visa). It supports both chip based credit cards and magnetic swipe credit cards. This gives the company an advantage over Square, which currently supports only magnetic swipe cards. iZettle recently launched a single device which supports all kinds of transaction across all platforms, which simplifies the entire process for the merchants using the device.
iZettle has successfully raised 66 Mn dollars, with investors like Index Ventures, Creandum, Greylock Partners, American Express, MasterCard, Northzone and SEB Private Equity. In UK it has entered into a partnership with EE, which is a JV between Orange and T-Mobile. This allows iZettle to sell its card readers through 297 EE stores and telesales channel in UK. It recently partnered with Banco Santander, the largest bank in Europe and one of the largest in the world. This strategic partnership has already proven to be fruitful, with iZettle’s expansion into Latin American countries like Mexico and Brazil, where Banco Santander has strong presence. The Mexican market can be particularly beneficial for iZettle, as it can act as a bridgehead to enter the American market. As said by Jacob de Geer, “Mexico is an interesting bridgehead given its geographical location. With our new Chip & Magnetic stripe reader that we’re launching, we could theoretically continue expanding north or south with the current infrastructure.”
As of November 2012, iZettle has 75000 registered users in Europe.With the introduction of innovative features like Smart Rate, and free analytics services, it is seeing high growth in these markets, a trend that is likely to continue in the future.
LTP View: The mobile payment segment in Europe is heating up; multiple players are looking to capture the market share. iZettle is doing the right thing by going after merchant acquistion in a big way and bringing small companies to the payment system. With its simplified service offerings and unique value added services, iZettle has positioned itself as a strong player in this field. With the support of VC’s, it may succeed in capturing a major market share in the European payment card reader market.