iZettle, Europe’s rival to Square, Checks Out Mobile Payments In The UK

Swedish payments startup iZettle has made its most significant move since coming out of beta last year, with a pilot program to enter the potentially huge British market.

British Market

Until now the company, billed as Europe’s equivalent to Square, has so far only made its product — a free plug-in dongle and app that let small merchants accept card payments through their iPhone or iPad — available in Sweden, Norway, Denmark and Finland. But as of Wednesday, it is offering 3,000 mini card readers to merchants in Britain, as part of a limited rollout in the United Kingdom.

iZettle is filling a practical need in the current market. The initial aim of the service, according to Jacob de Geer, the founder and CEO, is to target not those merchants that already take card payments, but those who have never signed on to using anything other than checks, cash and invoices to accept payments. There are roughly 20 million small businesses in Europe that fall into this category, he says, with the “uncarded” ranging from sole traders like carpenters to small independent cafes. “We’re not trying to go after those with existing infrastructure because switching costs are too high,” he says.

Anyone who wants to be part of the pilot can apply at iZettle’s U.K. website, although not everyone will necessarily be approved, because the company is trying ensure a spread of business types and locations.

Card Reading Dongle

The iZettle service works similar to PayPal’s Here and Square, in that a merchant plugs a card-reading dongle into an iOS device to process a card payment using an app downloaded to the device. Instead of reading the magnetic strip on the back of the card, iZettle reads the chip — these are now near-ubiquitous in Europe and tend to be more secure. Like other card payment services, you sign on the device screen to complete a payment, and the funds are deposited in a merchant account the next day.

Similar to other payment services iZettle works on a commission basis — in its case a percentage on each transaction, with that percentage varying by country. It actually dropped a transaction fee it used to take only days ago — perhaps a sign of how the area is heating up and so offering more competitive offerings is essential.

IZettle has already gathered some 50,000 merchants across the Nordic region, but this will be its biggest test yet: by de Geer’s reckoning the market could be three or four times larger — perhaps even more.

“It’s just the fact that there are 60 million people in the U.K., while across the entire Nordics there are 20 million. If you break it down, there are 1.2 million point of sale devices already in the U.K., whereas in the Nordics there are 300,000. All the numbers are drastically higher.”

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