iZettle takes on Payleven in Germany with Deutsche Telekom deal

Square is starting to take its first steps outside the U.S., but it’s still a way off from entering the European market. So on mainland Europe, certainly, we’re still looking at a war between Square’s clones: Sweden’s iZettle and Germany’s Payleven.

Having recently scored an investment from American Express, iZettle – already present in the Nordic countries and the UK – has just inked major deals for its German push. The company is partnering with both DZ Bank and the giant telco Deutsche Telekom, the latter of which will be pushing iZettle’s mobile payments gadgets in stores across the country.

“Strategically, Germany is one of our core markets, and we are committed to serving everyone from individuals to small businesses here long term,” iZettle CEO Jacob de Geer said in a statement.

“Our ambition is to become the undisputed market leader in Germany and given the partnerships with DZ BANK and Deutsche Telekom we believe we are very well positioned.”

Going for Germany make several kinds of sense. It’s a big market, for a start, but it’s also the home of Rocket Internet, the firm behind Payleven. This is an aggressive move, or is it?

iZettle is playing it coy on that point. “Germany has been on our radar for a long time and clearly we have established some strong partnerships there,” a spokeperson told me.

So let’s quickly look at the state of play here. iZettle is out in the UK, Sweden, Denmark, Finland, Norway and now Germany. Payleven is in Germany, of course, but also in Poland, Spain, Italy, the Netherlands and Brazil. Then there’s the UK-based mPowa, which recently signed a deal with South Africa’s First National Bank but is yet to tackle mainland Europe.

iZettle’s reader handles chip-and-PIN cards – Square’s does not, as they aren’t so big in the U.S., despite being more secure than magnetic-strip cards – but relies on signatures rather than PIN codes. Payleven’s product is (typically for Rocket) a close clone of Square’s. mPowa says it will offer full chip-and-PIN functionality.

But it’s really partnerships that are the key here. In mobile payments, a quick rollout will always benefit greatly from deals with banks and/or mobile carriers, as these established links in the value chain are keener than anyone to get involved in the new payments game.

“The cooperation with iZettle is a further step for Deutsche Telekom to strengthen the relevance of mobile payments in Germany and to position itself as a relevant player in the payment market,” Telekom innovation chief Thomas Kiessling said.