PayPal is swooping for Swedish payments start-up iZettle in a US$2.2 billion ($3.1b) all-cash deal, as it seeks to create a "one-stop shop" for transactions.

The deal will be PayPal's biggest purchase to date, gatecrashing plans by iZettle to float on the Nasdaq Stockholm in what would have been Europe's largest fintech IPO.

iZettle had only announced the IPO plans earlier this month, saying it would be the "way forward to support our growth" and provide access to capital markets. It had been seeking a US$1.1b valuation in the float.

However, in an interview with Bloomberg on Thursday, iZettle co-founder and chief executive Jacob de Geer said he had been convinced to instead agree a sale of the business after meeting with the executive team at PayPal.

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He will remain at the helm of iZettle after the takeover, and will be reporting to PayPal chief operating officer Bill Ready.

Mr de Geer said: "Combining our assets and expertise with a global industry leader like PayPal allows us to deliver even more value to small businesses to help them succeed in a world of giants."

PayPal boss Dan Schulman called the purchase a "strategic fit, with a shared mission, values and culture – and complementary product offerings and geographies".

"In today's digital world, consumers want to be able to buy when, where and how they want," he said late on Thursday.

iZettle provides credit card readers to many small businesses across South America and Europe, but has also been expanding into software and financing services, while PayPal has been looking to widen its presence in the point-of-sales payments market.

Although iZettle is still posting losses – in the first quarter of 2018, it reported negative earnings before tax, depreciation and amortization of SEK73 million ($12.1m) – it has been moving closer to profit, and iZettle and PayPal said financial benefits would feed through from the deal later this year.

In a joint statement, the pair said iZettle was expected to generate revenue of US$165 million this year, compared to US$89 million last year.