As the payment wars heat up, PayPal could have a leg above Square

As payment wars heat up, PayPal could beat Square

PayPal shares rallied on news it plans to acquire Swedish payment company iZettle, and all signs point to this as a smart move.

Even though the price tag is expensive — a hefty $2.2 billion — this helps solidify PayPal as end-to-end payments solution as retail shoppers continue moving online and payments are made increasingly on mobile phones.

This should also put to bed the rumors that PayPal was going to buy Square — and instead will now be a stiff competitor.

Where PayPal now stands

PayPal is a leader in the move to digital, and more importantly mobile payments, across the globe. It has a technology platform that includes Venmo and other payment services which allow customers and merchants to quickly, easily and safely execute transactions. The company also already has a wide reach, with over 225 million active accounts executing over 2.2 billion transactions per quarter in over 200 countries.

Gaining an edge

IZettle will likely provide small point-of-sale devices that attach to mobile phones to businesses that are offline. It is similar to the U.S.-based Square.

The acquisition will help PayPal expand its point-of-sale business in the small and medium business market, and gives PayPal exposure to some additional markets in which they do not already have a strong presence.

Disclosure: Binger's firm, Gradient Investments, owns PayPal in its portfolios; Binger does not own the stock personally.