TechCrunch also points out that some of iZettle's key markets such as northern Europe and Latin America, the latter through a tie-up with Santander, will introduce Paypal to areas where it has no presence.
The deal will enable PayPal to expand its presence in in-store payments globally, and will mark the largest-ever acquisition by the San Jose, California- based company.
"Small businesses increasingly want a full suite of capabilities across channels, a one-stop stop", Dan Schulman, chief executive officer of PayPal, said in an interview.
Schulman described the merging of iZettle and PayPal as a "strategic fit" combining shared values and culture with complementary product offerings and geographies.
"In today's digital world, consumers want to be able to buy when, where and how they want".
iZettle was founded in 2010 by Jacob de Geer and Magnus Nilsson with a mission to help small businesses and revolutionized mobile payments with the world's first mini chip card reader and software for mobile devices.More news: YouTube launching new music streaming service that rivals Spotify
Upon closing, PayPal gains in-store capabilities in the following 11 markets: Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Norway, Spain and Sweden.
By joining forces with PayPal, which operates in 200 countries, iZettle will be able to accelerate its worldwide expansion, including to the United States, the companies said.
De Geer will continue to lead iZettle, reporting to PayPal's COO Bill Ready, and will be joined by the rest of the iZettle management team.
PayPal could well be set to move further into high-street shopping after acquiring iZettle for $2.2bn.
The tie-up with iZettle will increase PayPal's capacity with firms with physical retail operations.
Since separating from online marketplace eBay (EBAY.O) in 2015, PayPal has reshaped itself from mostly processing transactions for its parent company online to offering a suite of digital payment services across the world.