PayPal invests $14 million in Amsterdam-based Klearly, signaling a deeper push into European fintech and hardware-free payment systems as digital transactions reshape merchant infrastructure.
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As 2026 begins, a quiet but consequential shift is unfolding across Europe’s payment sector. Large platforms are no longer competing only on scale or reach. They are competing on how seamlessly payments disappear into daily commerce. Against that backdrop, PayPal’s latest move into European fintech offers a clear signal of where global payments are heading next.
PayPal led a $14 million Series A investment in Amsterdam-based Klearly, a young company that has built a payments layer designed to work with existing point-of-sale systems rather than replace them. The round also included participation from Italian Founders Fund, Global PayTech Ventures, Antler Elevate, and Shapers, bringing Klearly’s total funding to $24 million less than three years after its founding.
At first glance, the round may appear modest compared with the billion-dollar deals that often dominate headlines. Yet its implications are broader. Klearly is already processing close to $1 billion in annualized payment volume with a workforce of about 40 people spread across the Netherlands, Italy, Belgium, and Israel. For PayPal, the investment fits into a longer-term strategy focused on Europe’s fragmented but fast-moving payments market, where hardware-free solutions are beginning to gain traction.
A different approach to merchant payments
For decades, accepting card payments meant hardware. Cash registers gave way to terminals. Terminals gave way to proprietary devices leased from banks or acquirers. Each upgrade brought new costs, new contracts, and long installation cycles. Klearly was built to avoid that model entirely.
Instead of pushing merchants to swap out terminals, the company developed a software-based payments layer that connects directly to existing systems. Smartphones and tablets become payment acceptance tools, eliminating the need for dedicated devices. This approach has allowed merchants to begin accepting digital payments without replacing infrastructure they already rely on.
Klearly’s “Tap to Pay” technology is central to this model. The system enables contactless payments on both Android and Apple devices, as well as on modern terminals already in use. Apple selected Klearly as the first fintech globally to launch Tap to Pay on iPhone, a move that placed the startup on the radar of larger players looking for alternatives to traditional acquiring models.
Merchant uptake has followed. During 2024, Klearly onboarded roughly 4,000 merchants and recorded a 500 percent increase in payment volume. The growth suggests that small and mid-sized businesses are increasingly willing to move away from fixed hardware, particularly as margins tighten and digital transactions become the norm.
Europe’s payments problem, revisited
Europe has long presented a paradox for global payment companies. On one hand, the region is deeply digitized, with high card usage, strong consumer protections, and advanced banking infrastructure. On the other, it remains highly fragmented. National regulations, local acquiring rules, and varying consumer preferences make it difficult for any single solution to scale uniformly.
Hardware-free payments offer a way around some of those barriers. By relying on software rather than physical terminals, companies like Klearly can deploy faster across borders, adapt to local requirements, and reduce upfront costs for merchants. For businesses operating across multiple European markets, this flexibility matters.
It also aligns with broader trends in fintech, where software layers increasingly sit on top of existing rails rather than attempting to replace them outright. In that sense, Klearly’s model reflects a pragmatic evolution rather than a radical break with the past.
Why PayPal is leaning into Europe
PayPal’s decision to lead the round points to more than confidence in a single startup. Over the past few years, the company has steadily expanded its European footprint through investments and partnerships that extend beyond traditional online payments.
In September, PayPal led a €25 million Series B round for French wealth management app Finary. In November, it renewed a large-scale agreement with KKR to support Buy Now, Pay Later services across France, Germany, Italy, Spain, and the United Kingdom through 2028. Together, these moves show a company positioning itself deeper inside Europe’s financial services ecosystem.
Market data helps explain the focus. Europe’s BNPL sector alone is projected to reach $190 billion in transaction value in 2025 and continue growing toward $293 billion by the end of the decade. Physical retail remains central to that growth, especially as BNPL, contactless cards, and mobile wallets converge at the point of sale.
By backing Klearly, PayPal gains exposure to the physical commerce layer without committing to hardware manufacturing or distribution. The investment allows PayPal to observe how merchants respond to device-agnostic payments while maintaining optionality around future integrations.
From terminals to software layers
The broader implication of Klearly’s rise is a shift in how payment acceptance is defined. Traditionally, acquiring was tightly linked to hardware ownership and leasing. Software updates followed hardware cycles, often measured in years. Hardware-free systems reverse that relationship. Software evolves continuously, while devices remain general-purpose.
For merchants, the appeal is straightforward. Lower upfront costs. Faster onboarding. Fewer vendor dependencies. For payment companies, the benefits include quicker deployment, richer data, and easier integration with value-added services such as loyalty programs or analytics.
This is where PayPal’s interest becomes clearer. As competition intensifies across both online and offline payments, controlling the software layer at checkout becomes increasingly valuable. It offers visibility into transaction flows without the capital intensity of hardware distribution.
Scaling without adding complexity
Klearly’s small team relative to its transaction volume highlights another trend shaping fintech in Europe: scale without proportional headcount growth. Cloud-native infrastructure, standardized APIs, and partnerships with device manufacturers have allowed startups to operate lean while serving thousands of merchants.
That efficiency matters in a regulatory environment that remains demanding. Payments companies must comply with anti-money laundering rules, data protection standards, and local licensing requirements. Building systems that scale across borders without adding operational drag has become a key differentiator.
Klearly’s presence across multiple European countries suggests its model can adapt to these constraints, though sustained growth will test that assumption. As volumes increase, so will scrutiny from regulators and partners alike.
What this means for merchants
For small businesses, the promise of hardware-free payments goes beyond convenience. It changes the economics of accepting cards and mobile wallets. Instead of committing to multi-year hardware contracts, merchants can rely on devices they already own. That lowers barriers for new businesses and reduces switching costs for existing ones.
It also shortens the distance between innovation and adoption. New payment features can be rolled out via software updates rather than physical replacements. In a sector where consumer behavior changes quickly, that responsiveness can be decisive.
Still, challenges remain. Reliability, security, and support must match or exceed what merchants expect from established terminal providers. Any failure at checkout has immediate consequences for trust.
A measured bet, not a headline grab
Despite the strategic implications, PayPal’s investment in Klearly remains measured. The company is not acquiring the startup or committing to exclusive arrangements. Instead, it is placing a calculated bet on a model that aligns with broader shifts in commerce.
That restraint reflects lessons learned across fintech over the past decade. Not every promising technology needs to be absorbed outright. Sometimes, observing from close range offers more value than ownership.
For Klearly, the funding provides resources to expand into additional European markets and refine its product. For PayPal, it offers insight into how merchants and consumers respond to hardware-free payments at scale.
The larger picture
Europe’s payments sector is entering a period of gradual but meaningful change. Cash usage continues to decline. Contactless adoption remains high. Merchants seek lower costs and faster setup. Against that backdrop, software-first acceptance models are likely to gain ground.
PayPal’s backing of Klearly suggests that large incumbents are paying attention to these shifts. Rather than resisting them, they are choosing to participate, selectively and strategically.
The outcome will not be decided in a single funding round or product launch. It will depend on whether hardware-free systems can deliver reliability, compliance, and scale across diverse markets. For now, the investment signals confidence that the experiment is worth pursuing.
As payments continue to move away from dedicated devices and toward general-purpose technology, Europe may serve as one of the most important testing grounds. The decisions made there will influence how commerce functions well beyond the region.
