PayPal Holdings Inc. today said it has agreed to acquire Swedish mobile payments startup iZettle AB in a $2.2 billion deal that will see PayPal directly take on onsite payment processing companies such as Square Inc.

Founded in 2010, iZettle offers small businesses portable point-of-sale solutions and free sales overview tools, often earning in the description of being the “Square of Europe.” The company’s technology allows users to take payments with no startup costs, no contracts and no monthly fees with a set of tools designed to assist entrepreneurs.

In addition to its merchant services, and differentiating it from the likes of Square, iZettle offers Advance, a loan service for small businesses, meaning that it also operates as a lender as well as a merchant services provider.

“Small businesses increasingly want a full suite of capabilities across channels, a one-stop shop,” Dan Schulman, chief executive officer of PayPal, said in an interview with Bloomberg. “iZettle was the perfect fit in many ways.”

The announcement of the deal comes less than two weeks after iZettle said it was planning to float the company on the Nasdaq Stockholm Exchange. Chief Executive Jacob de Geer said in an open letter that PayPal got in touch “late in the IPO process” and showed “a serious interest in iZettle.”

“The relationship with PayPal is not a new one, in fact we’ve talked about different ways of working together for years,” he said. “But this time it very quickly turned into a detailed discussion on how we could benefit from joining forces. And we both realized the great opportunity in doing just that.”

Although iZettle currently offers services only in Europe and Latin America, PayPal is set to leverage the company’s platform and intellectual property to move into mobile merchant payments in its home market. Schulman confirmed the intent in a roundabout way, saying that the acquisition will allow for “the acceleration of omnichannel commerce solutions in Australia, U.K. and U.S.”

Coming into the acquisition, iZettle had raised $224 million. Investors included 83North, Creandum, Dawn Capital,  Intel Capital, Index Ventures, MasterCard, American Express, Hasso Plattner Ventures, Hermes GPE Environmental Innovation Fund, MCI Capital SA, Northzone, Santander and SEB Private Equity.

Photo: dahlstroms/Flickr