Today, iZettle announced a strategic investment of €5 Million from Banco Santander, the EU’s largest bank by market cap and one of the largest banks in the world. How big is that? EUR 1.388 Trillion with a “T”. iZettle started working with the banking group already a few months ago, when they announced a partnership which made iZettle available to Santander banking customers in Spain, their home market.
When we compare the investment size to iZettle’s overall funding of over €35 million, then it is clear that this is indeed a strategic investment and the money is perhaps secondary. After all, when it comes to mobile point of sale solutions, the name of the game is partnerships. How many different parties and entities can you partner up that can help you grow in different markets? iZettle’s US rival Square, for example, was backed by VISA when it clearly did not need the money.
Similarly, this investment round is probably more important to iZettle in terms of the end users that it can reach thanks to Banco Santander. Especially because the banking group has over 102 million customers worldwide and is the largest financial group in Spain and Latin America with a strong presence in United Kingdom, Portugal, Germany, Poland and the U.S.
Ramón Tellaeche, the head of Santander Cards at Banco Santander commented that “Millions of small business owners and professionals in the markets where we operate need an alternative to conventional credit card terminals, and simple software to manage and analyze their transactions. We believe iZettle’s innovative mobile technologies will be crucial to those merchants’ near and long term success.”
Let us once again compare this to Square, who in addition to Visa received funding from Starbucks. In this investment round, Starbucks also promised to eventually use Square to process all credit/debit card transactions in its 7,000 locations. That seems like a lot, but it is still only about 0.006% of Santander’s customer base.
This whole thing might seem like a minor news, but if you think about it, it might be the biggest thing to happen to iZettle since launch. This shows their general strategy and if they continue making partnerships with banks, it will enable iZettle to get new customers much easier. This is not the first time that the company partnered up with a bank, they have a partnership with DZ Bank in Germany as well.
Basically once you set-up a company, you must go to a bank, where you will normally be offered a credit card terminal for your POS. With partnerships like this, you will also be offered a cheaper, easier and simpler mPOS solution and if this is always iZettle, growth is virtually guaranteed and can help them catch up to Square.
Of course it is also important to partner up with other large players in the market and iZettle seems to be getting this portion of the business right by cooperating with Deutsche Telekom in Germany, Everything Everywhere in the UK and Telia in Sweden. They also have other strategic investors such as MasterCard and American Express.