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This Swedish Mobile Payments Startup Could Be Europe’s Answer to Square

July 7, 2016, 12:28 PM UTC
Customers Pay With Contactless Cards
A customer enters their pin number as they make a chip and pin payment via a Verifone Systems Inc. credit card payment device at a restaurant in London, U.K., on Friday, May 22, 2015. Credit and debit cards that can be used by tapping the reader are gaining users, and mobile apps are set to further boost the popularity of contactless paying. Photographer: Simon Dawson/Bloomberg via Getty Images
Bloomberg via Getty Images

Mobile payment solutions business iZettle’s growth strategy is continuing apace, it said on Thursday, citing an 81% leap in revenue last year.

One of Europe’s fastest-growing tech startups, iZettle is among a group of fledgling fintech businesses taking on traditional banks.

The revenue increase came at a cost, however, with its operating loss widening because of heavy spending to attract customers.

“The numbers are according to plan as we’re fully focused on growth and are investing in expanding our product offering and customer acquisition,” iZettle Chief Marketing Officer Johan Bendz told Reuters. “We’re growing revenue twice as fast as costs, so we’re heading in the right direction.”

The company reported 2015 revenue of 345 million Swedish crowns ($40 million), against 190 million crowns the previous year. The operating loss increased slightly to 258 million crowns, against 228 million crowns in 2014.

Established in 2010, iZettle offers small businesses and individuals a way to take payments using mini credit card readers that turn smartphones or tablets into cash registers. Last year it added France as a new market and launched new products such as iZettle Advance, a loan service for small businesses.

The company employs 275 people and is present in 12 markets in Europe and Latin America.

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Its rival Square (SQ), a U.S. mobile payments company that also offers a credit card reader and is run by Twitter (TWTR) Chief Executive Jack Dorsey, increased revenue by about 50% to $1.3 billion in 2015.

Square went public last year and is trading flat to its IPO price. It reported a quarterly loss in May as costs surged.

Smaller Swedish rival iZettle has raised 140 million euros ($155 million) of funding to date from investors including Intel Capital (INTC), Northzone, American Express (AXP), Index Ventures, and Banco Santander.