Paypal's acquisition of iZettle has also come at a time when the latter has already filed for an IPO in the Stockholm stock market for raising almost $227 million.
The company has a presence in 11 countries and offers other services for small businesses such as lending. "iZettle and PayPal are a strategic fit, with a shared mission, values and culture-and complementary product offerings and geographies".
"Small businesses are the engine of the global economy and we are continuing to expand our platform to help them compete and win online, in-store and via mobile", said PayPal President and CEO Dan Schulman. In today's digital world, consumers want to be able to buy when, where and how they want.
The digital payments giant PayPal Holdings is in advanced talks about a takeover of iZettle in a move that would gatecrash one of the European technology sector's biggest stock market flotations.
It would be the largest ever deal for PayPal, Bloomberg reported.
PayPal was even cast aside by EBay earlier this year in favour of Dutch fintech startup Adyen, which is also thought to be plotting an IPO with a valuation of more than $1bn.
iZettle CEO Jacob de Greer and the company's management team will continue to lead the business, which expects to process US$6 billion in payments in 2018 and have gross revenues of US$165 million. The deal will be an all-cash deal and is expected to be closed by third quarter of the current financial year.