STOCKHOLM–Sweden’s iZettle, a startup that makes credit-card readers that turn mobile devices into portable teller machines, has raised an additional €60 million ($68 million) in equity to help launch a new service that offers cash advances to small businesses.
The most recent investment values the company at more than $500 million, according to a person familiar with the matter. It comes as venture-capital investment in European payments companies is surpassing dotcom boom levels, boosted by the fast take-up of digital technologies and shifts in consumer behavior.
With the new credit service, the Stockholm-based company said on Friday that it will begin to provide cash advances to merchants that use the iZettle card reader. iZettle will judge the credit risk by looking at users’ history and loans will be repaid to iZettle as a cut of future sales.
“Small companies have persistently been underserved by the traditional finance industry,“ iZettle Chief Executive and co-founder Jacob de Geer said.
iZettle’s move into cash advances follows the footsteps of U.S. rival Square Inc., which, prompted by the low margins of the credit-card transactions business, last year rolled out a small-business lending program. The latest round of financing, led by previous investors Intel Capital which is the venture arm Intel Corp., and by Zouk Capital, brings the total financing that iZettle has raised to date to about €150 million.
iZettle, which operates in 11 countries, including the U.K. and Brazil, said its cash-advances program will initially be available in Europe.