Since coming out of beta last year, Swedish payments service iZettle has been very careful about how it has grown. The company — which, like Square, lets people take card payments through their iPhone — first launched in its home market, then the rest of the Nordic region, followed by a pilot in the U.K..
Now, however, it looks like the time for slow expansion could be over, as the business prepares to step up its game massively thanks to a new €24 million ($31 million) round of funding.
The investment round is being led by Greylock, out of its London office, and Scandinavian venture firm Northzone, best known for its stakes in companies like Spotify and Lastminute. Other investors joining in include private equity firm SEB, as well as existing backers Creandum and Index Ventures. But perhaps most interestingly, Mastercard has gone from being a partner to a strategic investor — especially intriguing given that Visa made a similar pact with Square last year.
This doesn’t mean that iZettle is actually going to go head-to-head with its rival in San Francisco — not least because there is a huge technical difference between the two. Although they look pretty similar, Square works on the American system of magnetic stripe cards, while iZettle is focused on the payment cards with embedded chips that are popular in the rest of the world.
But CEO Jacob de Geer told me that it was time for his company to take what it had learned in the Scandinavian region and go big, with launches in France, Germany and other major European markets on the cards. There is even, he hinted, the potential for rollout even further afield.
“The world is changing fast,” he said on the phone from New York. “I wouldn’t say this is us going into battle — it’s us going to market. All the other guys are doing great products for their users… it’s all about expansion.”
“The major markets are what we’re going for,” he added. “Fifty percent of cards in the world are chip-equipped — so we are looking into that. But right now we’re focusing on Europe, because it’s the region we understand.”
And while Square has shown little interest in expanding internationally, iZettle won’t be out there on its own for long. Its chief competitors are more likely to be companies like PayPal, which wants to move fast with its PayPal Here service, and NFC payment services, which are being pushed hard by a lot of the banks and card companies.
Oh, and then there is always the threat of Germany’s Samwer brothers, who are said to be working on a similar system called Zenpay.
But iZettle may be hoping it can use the money it’s just raised to get a jump on the rest, at least in Europe. It’s already said it wants to go beyond iOS, and de Geer confirmed that the next version will, unsurprisingly, be for Android. But there’s still a lot of testing, re-education and explanation that the business has to do before it can become mainstream. And for parallels, he looks to another Scandinavian startup you may have heard of.
“When I talk to merchants or cardholders, they get it, there’s not too much pushback… but the industry and banks don’t really know what we do. We’re facing the same kind of problem as Spotify did when it had to negotiate with the record labels.”