PayPal has launched Zettle in the U.S. — but it's not the same product PayPal bought just three years ago.
Zettle, formerly iZettle, launched in 2010 in Stockholm as a local rival to Square's mobile point of sale platform. PayPal purchased Zettle in 2019 for $2.3 billion, despite having its own competing offering, called PayPal Here.
The American version of Zettle supports connections to PayPal's invoicing service and a business Mastercard. Zettle enables integrations with accounting and e-commerce technology connections such as BigCommerce, Lightspeed, Quickbooks Online and SalesVu, with added partnerships planned over the next few months.
By integrating with other providers, PayPal is working to help businesses manage overall finances, with potential connections to PayPal's merchant lending arm that's tied to consumer payment flow. PayPal is trying to sell merchants on a combination that includes measuring consumer demand against supply, and streamlining B2B payments and treasury management.
These integrations speak to "a historic shift in consumer behavior towards digital channels, which poses an unprecedented challenge to small businesses that are struggling to adapt to meet these new customer demands," said Jim Magats, senior vice president of omni payments for PayPal, which works with a network of about 30 million businesses, mostly small- to medium-sized enterprises.
Small merchants value the ability to sync online and offline systems, product catalogs, inventory management systems and other functions, Magats said. A merchant that works with BigCommerce for example, can press a button and BigCommerce's inventory gets synced to the retailer's store inventory.
"This is especially important for small businesses that often have to keep their in-store and online inventory siloed," Magats said. "We see PayPal Zettle as an orchestrator for commerce tools. Our job is bringing all of these solutions together to make it easier for small businesses."
For PayPal, Zettle will boost point of sale capabilities beyond PayPal Here, the company's
PayPal Zettle is a much more robust, integrated, end-to-end product for small and medium-size businesses that offers a better customer experience and includes features like contactless payments, PayPal and Venmo QR Codes, popular digital wallets, an improved product library and reporting, integrations with partners and a better user experience design, Magats said. The payment company will continue to support both PayPal Zettle and PayPal Here, but it will eventually develop one product, according to PayPal.
Zettle helps PayPal address a
"PayPal has been focused on helping online and mobile businesses," Magats said. "With the launch of PayPal Zettle, PayPal will be able to better serve in-store and omnichannel businesses in an integrated and seamless way, and help in-store businesses seamlessly go digital."
PayPal is not operating in a vacuum, and these strategies are playing out at other merchant technology companies.
And Fiserv has used the Clover point of sale system that it acquired from Fiserv to build out an increasingly larger menu of merchant services, including a recent acquisition of
While most commerce still takes place at the physical point of sale, the pandemic's impact on retail requires merchants to support both digital and physical points of sale, with integrations between online and instore shopping, said Richad Crone, a payments consultant.
Consumers can spend prepaid idle PayPal balances, use buy now/pay later and spread social payments through worth-of-mouth promotions via the combination of products that PayPal and Zettle support, Crone said.
"It's the perfect timing for this launch as it's propelled by the demand demented by the pandemic for integrating commerce with check in, checkout, payment and supply chain management for the merchants," Crone said.
PayPal's acquisition of Zettle was in part a counter to Square's European expansion. PayPal often
PayPal can use its
"PayPal has a robust network effect whenever they expand services and features to provide a suite of payment solutions and business tools for merchants," Pucci said. "Introducing PayPal Zettle at point of sale is a logical move as many of their online merchant customers also have an in-store presence."
Beyond Stripe and Square, other technology firms are adding physical point of sale to a digital payments franchise. Shopify offers
The POS field will become more competitive especially now as Zettle also goes up against leading market players Clover and Square, Pucci said. "Small and medium-sized merchants will benefit as more payment vendors will aggressively fight for their business."