Mobile Payments Startup, iZettle, Partners With 4G Carrier EE For Formal U.K. Launch, Tells Square To Steer Clear Of Europe “Battle”

iZettle, the European Square-a-like mobile payment dongle plus app service that's raised €42.6 million($54.6 million) to-date, continues to bulk up its activity in Europe. Today it's officially launching in the U.K. — having operated in beta since May. iZettle currently has 4,000 U.K. users — around 5 percent of its total user-base — and said interest in its system during the trial phase has been "enormous."

iZettle has partnered exclusively with carrier EE for its formal U.K. service launch — iZettle CEO and co-founder, Jacob de Geer said the exclusivity with EE will "last for some time" but anticipates working with other U.K. carriers once it expires.

EE is the joint venture behind U.K. 3G carriers Orange and T-Mobile, and also operates the country's first 4G mobile network, 4GEE, which launched at the end of last month. De Geer said the partnership covers all three of EE's brands — not just its 4G network. Other partners on the U.K. launch are MasterCard and Amex, he said.

iZettle is currently used by more than 75,000 small businesses and individuals in six European countries: Sweden, Norway, Denmark, Finland, Germany and the U.K. In the latter country, the iZettle/EE offering kicks off tomorrow when the startup's mini chip-card readers will go on sale in 297 EE stores and via EE's telesales channel (iZettle will also continue to sell the card readers direct via its website).

EE is not offering iZettle's dongle in all its stores, but rather targeting stores in areas where the small business market is likely to shop, according to Gerry McQuade, Chief Marketing Officer at EE.

As with other mobile payment dongle services, such as the Rocket Internet-fuelled Payleven, iZettle's service is being marketed to small businesses and tradespeople — such as electricians and plumbers — as an alternative to chasing cash payments. (It should be noted that Square has branched out from this market, adding support for its payment dongle from multinational juggernaut Starbucks.) EE has commissioned research to back the launch which claims small electrician, plumbing and building firms in the U.K. are currently owed up to £283m collectively as a result of late cash payments.

Of course, unlike cash payments, iZettle payments carry a fee — namely 2.75 percent of the transaction amount. iZettle does not charge a set-up fee (beyond the cost of the dongle) or a monthly fee on top of this. There's no minimum spend limit either. Merchants using iZettle can accept customer payments by Visa, MasterCard, American Express and Diners Club, so clearly iZettle has put its Visa acceptance issues behind it (de Geer confirmed to TechCrunch: "We now are able to offer Visa acceptance to all our merchants.").

The dongle will cost £20 in EE stores, and includes a £20 voucher that can be put towards iZettle transaction fees. It's compatible with iPhones, iPads, and more than a dozen Android 2.1 and higher smartphones and tablets.

iZettle's system uses a chip and sign method for payments, rather than the magnetic swipe system used by Square. This was a factor for EE choosing iZettle over rivals, according to McQuade. He told TechCrunch's Mike Butcher: "We did talk to people like Mastercard to get views on where this part of the industry is going so yeah [the chip system rather than magnetic strip] was a factor but there's no doubt just the simplicity of [iZettle] is very, very strong."

Customers paying via iZettle insert their cards into the dongle once the merchant has entered the amount and signs the transaction using their finger on the touchscreen. Payment receipts are sent digitally via email.

McQuade added that EE had been looking into the mobile payments market for more than a year, with help from Mastercard — and had looked at "just about everythng that was there" (presumably including Square) before finally settling on iZettle. "We do think this is better [than Square]," he told TechCrunch's Mike Butcher. "We had looked at it and we're much more comfortable with this.  I think it fits what we believe in in terms of simplicity."

U.S. mobile payments company Square hasn't launched in Europe yet — although CEO Jack Dorsey has signalled his intention to take the company beyond the U.S., and recently raised a $200 million Series D round to fuel geographical expansion. In the meantime, iZettle, Payleven and others are racing to acquire customers and build marketshare ahead of what must surely be some inevitable consolidation in the m-payments space.

Asked about the increasingly competitive landscape for mobile payments, iZettle's de Geer told TechCrunch's Mike Butcher: "It's getting competitive but you haven't seen much of Payleven, even though they said they've launched [in the U.K.] — so it's going to be exciting to see what and if they actually launch and when.

"With regards to Square I think it makes sense for them not to focus too much on Europe — there's already a battle over here."