iZettle, Square’s European cousin, gets €5M infusion from Banco Santander

As Square dawdles back in the U.S., its would-be European competition is trying to lock down the emerging mobile payments market. Sweden’s iZettle, one of the more successful payments startups so far, just landed a €5 million (U.S. $6.6 million) investment from Europe’s largest bank Banco Santander(s san) as well as a deal to sell iZettle’s service and smartphone card reader to the bank’s U.K. customers.

$6.6 million seems like chump change compared to Square’s most recent $200 million round, but as iZettle points out this is a strategic investment, giving it direct access to Europe’s established financial community.

“We want to bring iZettle to the world, and to do that we must have strategic partnerships with the world’s leading banks,” iZettle CEO and co-founder Jacob de Geer said in a statement. “Our relationship with Banco Santander is central to our transition from local to multinational services.”

mobile paymentsSo far, the big peer-to-peer payments providers in the U.S. have hesitated entering the European mobile market, probably because the mechanics of a point-of-sale credit card transaction is different over the Atlantic. Europe relies on the Chip & PIN system, which requires an additional layer of verification compared to U.S. systems.

PayPal(s ebay) has ventured into limited trials in the U.K. with an expanded version of its smartphone card reader, designed to accept Chip & PIN payments. Square, however, has been looking to the north (Canada) and Far East (Japan) for its international expansion.

But iZettle faces plenty of homegrown competition. The Samwer brothers Payleven is well established, and has inked a deal with Apple(s aapl) to sell its card reader at its stores. There’s also the U.K.’s mPowa as well as SumUp and Ayden.

iZettle only came out of beta in late 2011, but since then it has been establishing footholds in key European markets. It now offers its mobile payments service in the U.K., Spain, Germany, Sweden, Denmark, Norway and Finland, and says it will expand into more markets shortly. Its reader and app work on the iPhone and Android devices.

The company has closed two funding rounds, raising more than €40 million if you include the Banco Santander investment. Its investors include Greylock, Scandinavian VC Northzone, Index Ventures and Creandum as well as financial giants Mastercard(s ma) and American Express(s axp).