Competition watchdog drops objections to PayPal takeover of iZettle

An initial Phase 1 investigation by the Competition and Markets Authority (CMA) had raised concerns that PayPal’s purchase of its rival might reduce competition in the supply of mPOS devices in the UK, with iZettle’s customers, typically small and medium-sized businesses, paying higher prices or receiving a lower quality service.

The CMA was also concerned about the potential impact of the merger in ‘omni-channel’ payment services, where PayPal has already established a strong position and iZettle had been expanding its presence.

The deal was subsequently referred to an independent panel for a full-blown Phase 2 investigation.

The probe revealed that, while iZettle and PayPal are two of the largest suppliers of mPOS devices, their customers are also willing to switch to ‘traditional’ POS devices provided by the likes of Barclays and Worldpay. Additionally, the panel felt concluded that the combined company would also face significant competition from other mPOS-only players, such as Square and SumUp, which have both grown significantly in recent years.

In omni-channel services, the CMA found that iZettle would only have been able to develop its offering slowly and would have remained a marginal player for the foreseeable future. The CMA also found that other significant competitors would be more important constraints on PayPal.

Kirstin Baker, the inquiry chair, says: "The payment services sector is dynamic, and our in-depth investigation has enabled us to carry out a large amount of further analysis about how competition is likely to develop in future.

"While iZettle and PayPal are two of the main suppliers of mobile point of service devices, the additional evidence we have analysed indicates that the distinctions between these and ‘traditional’ point of service devices are reducing over time and that large numbers of customers can and do switch to ‘traditional’ point of service devices."