Paypal Holdings Inc (NASDAQ:PYPL) has acquired iZettle in a deal valued at $2.2 billion. The take over financial-technology company iZettle will deepen the presence of PayPal in Europe and also helps to compete with Square Inc (NYSE:SQ). The deal will be closed in Q3 2018.

It is the largest acquisition for PayPal and expands the offline commerce push as iZettle helps the small businesses in Europe in accepting the credit cards with the help of a Smartphone. Other products of interest for PayPal from iZettle include business loans, invoicing products and point of sale systems.

Dan Schulman, Chief Executive Officer of PayPal said the take over of iZettle is a strategic fit. The acquisition helps PayPal to become a one-stop solution worldwide for omnichannel commerce. The company will be able to offer payment processing as well as other tools for the small businesses. PayPal will give a tough fight to Square on all fronts.

Following the takeover news, the shares of PayPal has soared by 1.8% while the shares of its rival Square declined marginally by 0.2% on Thursday.

PayPal has been scouting for acquisitions for the past several quarters if it could find a suitable partner. The company is flush with more cash after staging a decision to divest the consumer loan business in 2017 to Synchrony Financial (NYSE:SYF).

According to the CEO of PayPal, the company was searching a company that provides a push to expand geographically and accelerates the growth of its verticals or a company that fits its existing business.

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David Koning, a Baird Analyst said the deal with iZettle helps PayPal to make an entry in the brick and mortar business. PayPal may expand this business into the US to give a stiff competition to Square.

Omnichannel commerce is vital for payment companies to conduct business with all in one tool for both offline and online businesses. The takeover will help PayPal to provide the merchants with an omnipayment solution. The company is expecting gross revenues of $165 million from this takeover in 2018.

To enhance its e-commerce capabilities, Square is looking for taking over of Weebly Inc.