Beyond HumanBig PictureCatalystsConnected WorldExchangeMarketing MixNew MoneyNew SchoolPeople SciencePulse

How iZettle is using Apple Pay to stay ahead in European mobile payments

Photo credit:


Swedish firm talks to Hot Topics about the goal of bringing 'mPOS' card payments to 20m European retailers.

Yesterday I paid for a cup of coffee using Apple Pay on an Apple Watch.

In London.

OK. It was a demo. Apple Pay isn’t live in the UK till next month.

Still, the ‘ding’ and the pulse were very satisfying.

The demo came courtesy of iZettle, the Swedish mobile payments firm, to throw the spotlight on its new Card Reader Pro Contactless device.

To remind you, iZettle is in the mPOS game. What does this mean? Mobile point of sale (mPOS) gives retailers the ability to take card payments on a bluetooth reader connected to an app on their phone or tablet.

Why is this useful?

Well, the alternative is applying for traditional card reader supplied by Verifone and others. Typically, it costs a lot of money and a few weeks of form filling and waiting to get one of these.

iZettle will supply its reader in a day or two. They cost €79, but there’s even a free ‘bare bones’ option for those who want to test the service out.

Naturally, these cheap readers give ‘long tail’ retailers (market traders, pop up shops, street food vendors etc) the chance to take card payments for the first time, but they can also change in-store dynamics.

With a card reader and an iPad you can take payments anywhere – not just at a till. In theory, this is a queue buster – leading to the possibility of even more sales.

Finally, and perhaps most important, mPOS gives ‘old school’ merchants the chance to digitise their sales. If you take cash, or even if you manage to get hold of a traditional card reader, it’s laborious to keep track of what’s selling and when.

Fact is, most small merchants use a pen and paper or maybe a manually-entered excel document.

iZettle claims to change all that. Its software automatically organises everything. Once a merchant has listed their inventory, they can then see at a glance the pattern of daily, weekly, monthly sales.

Armed with this information, they can make better business decisions.

Of course, iZettle is not the only player in the mPOS game. Which is why it has to keep innovating.

The decision to launch a contactless reader – one capable of working with Apple Pay – is just the latest move to stay ahead of competitors like PayLeven, PayPal, SumUp and Jusp.

Yes, it’s a hotly contested space though it’s probably fair to say iZettle is regarded as the top dog in Europe.

Investors certainly believe in its mission. Total investment capital raised since the company was started in 2011 stands at just over €85 million ($118 million).

Hot Topics caught up with iZettle’s UK chief strategy officer Jens Munch.

Where is iZettle at now in terms of users and volumes?

We have $2bn in annualised transactions going through the system via hundreds of thousands of merchants in 11 countries.

Will the UK merchants be upgraded to your new contactless reader?

No, they have to buy it. We don’t make money off the hardware, so we can’t upgrade customers for free. But customers get that. They know they have to pay for new functionality.

How will Apple Pay change payments in the UK? After all, there’s evidence it’s not being used too much in the US.

People already use contactless here. In the US they don’t have the acceptance points. We have 10x the acceptance points and there are 50m contactless cards in the UK.

So I hope that the focus on Apple Pay will push adoption of contactless outside of London and the big metropolitan areas.

Why choose to focus on Apple Pay when it such a small part of the market?

We want to show that iZettle has the most complete service. We have zero integration, a free reader if you want it, full POS, queue busting and now contactless. No one else can match that.

But you do have competition. How do you assess the threat?

We don’t really think about the competition. There’s really only Payleven, SumUp and Jusp, but we don’t see a great deal of innovation from them. We’re the only ones doing contactless and a free reader in all markets.

Obviously Square is not a competitor as it’s not live in Europe. But how do you react to some of the criticism of that company – of people saying the mPOS model is flawed?

Square have been pursuing that Valley approach of very aggressive expansion. They’ve been trying to everything with marketplaces and consumer apps. Now, if you look at their messaging, you can see they’ve pulled back.

They’re focusing on the core of transactions and they’re right to. There is nothing stronger than payments.

Every merchant understands that if you’re losing a sale you’re losing money. That’s our pitch. It’s how we start every discussion with a new customer. Later, we can add services on.

But you don’t charge for these extra services?

No. We make money on transactions. The fact is, we’re not the best price for payment. 1.5 per cent is good, but if you’re doing £20,000 a month you could probably get better. But we give you a full solution and people will pay a premium for that. But no, we don’t directly charge for any of the extras.

What about bigger stores? Can you bring them into the iZettle fold?

To be honest, they are less likely to sign up with us because of the mosaic of agreements they tend to have with POS and payment processing providers.

However, some forward-looking retailers are adding iZettle readers as a complement to these systems in order to take payments when tills are busy.

Ultimately, though, there are 20 million European small businesses that don’t take card payments, so we have a vast long tail market to aim at.