The UK competition watchdog Competition and Markets Authority (CMA) has raised its concerns over PayPal’s $2.2bn takeover of Swedish start-up iZettle.
The UK regulator, which has completed first phase investigation into the deal, has found that PayPal could face insufficient competition in the UK after the acquisition.
The transaction brings together two of the largest suppliers of mobile point of sale devices in the UK.
The deal allows iZettle to make use of PayPal’s 19 million merchant relationships and the acquisition will give PayPal in-store presence in new markets in Europe and Latin America.
According to the UK regulator, customers, which include small and medium-sized businesses, could end up paying higher prices or receiving a lower quality service as a result of the merger.
Additionally, the CMA has considered the possible impact of the merger on the emerging market for ‘omni-channel’ payment services, where PayPal already has a better position.
CMA executive director Andrea Gomes da Silva said: “Payment services markets are evolving so it’s particularly important to look to the future when we assess competition and the effects of mergers on customers.
“While iZettle is a relatively recent entrant to payment services, it has already established a market-leading position in mobile point of sale devices and was well-placed to compete against PayPal in other emerging markets. That’s why we are concerned that PayPal’s takeover could lead to higher prices or reduce the quality of the services available to customers.”
Founded in 2010, iZettle is a Swedish financial technology company offering mobile payments services, through what it claims to be the world’s first mini chip card reader and software for mobile devices.
It provides services across Europe and Latin America, where it offers tools to small and medium businesses to get paid and sell smarter.
The acquisition allows PayPal to deliver a smooth commerce experience for merchants.