The trend is troubling for European policymakers who have been eager to develop a homegrown tech sector that has lagged the United States and China.

Founded eight years ago and based in Stockholm, iZettle began as a maker of products like credit card readers. But it has expanded its offerings to analytics software and even small business loans, giving it a strong foothold among such companies in Europe and Latin America.

Last week, it filed to go public, announcing plans to list itself on the Nasdaq Stockholm stock exchange, with ambitions for a $1.1 billion valuation. Among its existing investors are Mastercard and American Express, as well as the venture capital firm Index Ventures.

The purchase would boost PayPal’s international expansion, and help it compete with Square, which has focused on processing payments for small businesses. Both companies are trying to capitalize on the growing volume of purchases being made on mobile phones and the internet.