Swedish payments startup iZettle AB, a rival to Twitter Inc. founder Jack Dorsey’s Square Inc., raised 60 million euros ($67 million) to expand in Europe and fund a plan to offer merchants cash advances on future card sales.
The company, whose card-deck-sized devices are used by small businesses such as street-market vendors and neighborhood beauticians, completed the funding round led by existing investors Intel Capital and Zouk Capital, according to Jacob de Geer, iZettle’s founder and chief executive officer.
The funding gives the five-year-old startup a valuation of about $500 million, according to a person familiar with the matter, who asked not to be identified as the details aren’t public. De Geer declined to comment on company valuation.
IZettle Advance is the startup’s first venture away from processing card payments, allowing the Stockholm-based company to help customers access needed capital that banks aren’t always willing to supply and tap into the booming market for alternative lending. Advance offers loans to merchants that are repaid through a portion of sales processed by the iZettle device.
“These smaller businesses are excluded from the existing financial
ecosystem,” de Geer said in a telephone interview. “Banks aren’t too keen to help these guys out with credit or loans.”
Representatives for Intel Capital and Zouk Capital couldn’t immediately be reached to comment on the valuation.
IZettle’s card reader works with chip-and-PIN and contactless payment cards as well as mobile applications such as Apple Pay and Google Wallet. The startup, which has operations in 11 countries in Europe and in Latin America, is seeking a leg-up on competitors as it vies for a chunk of Europe’s estimated 2.2 trillion euros in annual card payments.
Square has also expanded from its original hardware business. Its Square Capital business-lending program advanced almost $25 million in capital in April. Square has confidentially filed for an initial public offering, people with knowledge of the matter said last month.
“We want to go out pretty aggressively with this new Advance service so part of the money will be used for that,” de Geer said of iZettle’s funding. “We see a tremendous interest from the segments we’re addressing, so growth is of essence for us.”