iZettle wasn’t kidding when it called Banco Santander’s recent €5 million (U.S. $6.6 million) investment “strategic.” Santander has already started selling iZettle’s service to its business banking customers in the U.K. Now the global bank is taking iZettle’s credit card overseas to Mexico.
Mexico will be first iZettle’s first non-European market, and it’s just a border crossing away from the U.S. Everyone has been waiting for Square to cross the Atlantic to challenge iZettle and Europe’s batch of home-grown smartphone payments processors, but it could be the other way around. Sweden-based iZettle plans to use Mexico as a stepping stone into other Latin American and North American countries.
“This is a very important day for us,” CEO and co-founder Jacob de Geer said in a statement. “Shifting from local to global operations in financial services in less than three years of operation is a major accomplishment from our perspective.”
Moving to North America required iZettle to tweak its Android and iPhone card reader technology. In Europe the Chip & PIN transaction rules, but it had to develop a new card reader that accepts the magnetic stripe cards common on this side of the pond. Those payments won’t come cheap, though.
iZettle will charge a 4.75 percent transaction fee for every mag stripe transaction, compared to the 3.75 percent it charges for Chip-verified purchases and the 2.75 percent flat rate charged by Square. The U.S. market is becoming increasingly crowded with mobile payments providers – Punchey just came out of beta today – so if iZettle does plan to enter the U.S. market, it will probably need to lower its fees.