Paypal already today offers card terminals similar to iZettle's, albeit at a smaller scale than the Swedish firm or its main rivals Shopify and Square.
The Stockholm-based startup founded in 2010 expected to handle about $6 billion in transactions this year, taking in gross revenue of approximately $165 million (roughly Rs. 1,100 crores) in the process.
Upon closing, PayPal gains in-store capabilities in the following 11 markets: Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Norway, Spain and Sweden.
By joining forces with PayPal, which operates in 200 countries, iZettle will be able to accelerate its worldwide expansion, including to the US.
The deal will be PayPal's biggest purchase to date, gatecrashing plans by iZettle to float on the Nasdaq Stockholm in what would have been Europe's largest fintech IPO.
The deal will also help PayPal provide a more comprehensive suite of services to its merchants.
For 2018, iZettle expects to generate gross revenues of United States dollars 165 million, and to process USD 6 billion worth of total payment volume (TPV) on its platform.
The transaction is expected to be approximately $0.01 dilutive to PayPal's previously communicated full year 2018 non-GAAP EPS. The two companies will continue to operate independently until close.
PayPal hopes the transaction will close in the third quarter, the company announced.