The UK’s Competition and Markets Authority (CMA) launched a full investigation into the impact of PayPal’s purchase of mobile payment terminal provider iZettle, on concerns it could be detrimental to small- and medium-sized businesses.

PayPal’s $2.2 billion acquisition for iZettle was announced in May and has subsequently been completed. However, in September PayPal confirmed the two brands would continue to operate separately until the CMA completed its assessment.

In a statement, the CMA said that investigation had now been progressed to a second stage, where a panel of independent experts will assess the impact on the UK market.

“After completing its Phase 1 investigation, the CMA has found that PayPal could face insufficient competition in the UK after acquiring its market-leading rival,” the association noted in its initial report.

“The finding raises concerns that the merger could result in customers, which include small- and medium-sized businesses, paying higher prices or receiving a lower quality service.”

CMA executive director Andrea Gomes da Silva added: “While iZettle is a relatively recent entrant to payment services, it has already established a market-leading position in mobile point of sale devices and was well-placed to compete against PayPal in other emerging markets. That’s why we are concerned that PayPal’s takeover could lead to higher prices or reduce the quality of the services available to customers.”