iZettle takes another step beyond payments, predicts €3bn transactions in 2016

iZettle_Jacob de Geer

Hitting its fifth birthday this year, Stockholm’s iZettle is taking another step beyond its core mobile payments business with the launch of a new tool to help small and medium-shaped businesses talk to their customers.

Dubbed Customers, the tool lets merchants input customer email addresses and then craft targeted campaigns to keep them coming back. This is the second add-on feature the company is offering small business following the launch of Advance cash advances last year. CEO Jacob de Geer’s tells PaymentEye it’s part of his longer term plan to take the company beyond its original vision of giving underserved businesses access to payments technology and starting to become more of a one-stop shop for SME financial services.

Meanwhile iZettle also says it is forecasting €3bn in transaction volume for 2016, which de Geer says is in line with expectations. iZettle is also cutting mobile payment fees for merchants to 1% (down from 1.5%) to undercut rivals on the market and cater to bigger ticket customers.

iZrettle new reader

iZettle at a glance

> Now live in 12 countries in Europe and South America
> Fastest-growing markets are the UK and Mexico according to CEO
> Transaction volumes forecast to hit EUR3bn in 2016
> Currently adding 1,000 new customer each day
> Lowest fee on mobile payments is now 1%

Fees, forecasts & new business
Offering its lowest fees on mobile payment transactions at 1% puts iZettle below European rival SumUp (which recently merged with Rocket Internet firm Payleven) at 1.95% and also lower than PayPal Here (the US firm’s mobile payment unit) which offers fees between 2.75% and 1.9%.

“When we started iZettle we primarily went for mono merchants and solo businesses – they wanted one thing and that was to be able to take payments,” de Geer tells PaymentEye. “When we developed our business to offer data analytics and additional services we noticed that we moved up the value chain.” He says the firm is now seeing bigger customers moving away from incumbents and switching to iZettle. “To address that segment we have to compete on price.” That doesn’t mean it’s moving away from the SME sector, however as bigger businesses would require different demands.

This isn’t the first time iZettle has made a move to undercut its rivals – the firm was the first to offer a free version of its card reader to merchants in Europe, aiming to help lower the barrier to entry for new users.

In terms of customer growth, right now iZettle says it is adding new customers at 1,000 per day. Although he won’t comment on comparative numbers, he says this is “significantly” higher than a year ago when the firm was still finding the best customer acquisition model.

European payments shake out

With two of the firm’s main rivals merging in Europe merging this year, what’s de Geer’s outlook for the industry over the next few years?

“We are right now at point where markets are more shaky especially in the US,” he says. Europe is more stable and valuations of companies over here are at a much more sane level. However the consequence of what is happening over there is that it is tougher for companies that are not yet profitable or making revenue. It will be hard for them to raise money at decent valuations. Some won’t make it as they can’t raise cash, some will find a way to make it and others will join forces to make a bigger company. We will see a shake out from some of the smaller players.”

Asked by PaymentEye ahead of the announcement how closely iZettle at five years old compares to the original vision he had for the company back in 2011, de Geer says: “What is most fascinating about where we are now is that we did not predict this tremendous change in our industry,” says de Geer.

Diversifying its product range makes sense for the company as the industry has shifted quite a bit in the last few years, says de Geer.

“We went to market with one product solving one problem for small merchants who couldn’t take payments. Today the industry is at a place where everything is being questioned. Financial services are still lagging behind in so many ways in terms of modernising processes and culture.” Will there be more add-on services? De Geer says there is “no reason” why not.

The firm also released an updated version of its point of sale hardware.

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