iZettle

PayPal has bought Swedish payments company iZettle for $2.2 billion to expand its in-store presence, the company announced Friday.

With an app and chip card reader, iZettle terminals are a common sight at checkouts across Europe, where the contactless payment ecosystem is well established. The company's hardware provides an alternative to Jack Dorsey's Square, and is popular among small businesses.

The two companies are "a strategic fit," said PayPal President and CEO Dan Schulman in a statement. "Small businesses are the engine of the global economy and we are continuing to expand our platform to help them compete and win online, in-store and via mobile," he said.

iZettle said earlier this month that it was preparing to IPO, but late in the process PayPal got in touch to express interest in buying the company, said its CEO and co-founder Jacob de Geer in an open letter.

"Plans sometimes change," he said. "The relationship with PayPal is not a new one, in fact we've talked about different ways of working together for years. But this time it very quickly turned into a detailed discussion on how we could benefit from joining forces."

The sale is expected to close in the final three months of 2018, after which de Geer will continue to lead the iZettle team within PayPal.