Shares of point-of-sale-solutions provider Square (SQ) are falling after the company announced a $750M convertible-debt offering as its payment rival PayPal (PYPL) turns up the competition.

PAYPAL BUYS PAYMENT STARTUP IZETTLE. Late last week, PayPal announced that it agreed to acquire iZettle, a small business commerce platform in Europe and Latin America, for $2.2B. The acquisition of iZettle significantly expands PayPal's in-store presence, strengthening PayPal's platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment, said PayPal in a statement. Soon after PayPal announced the acquisition, Morgan Stanley analyst James Faucette said PayPal's acquisition of iZettle, which offers products similar to Square's in 12 markets, is likely to be a check on Square's international expansion efforts, though he said he does not expect PayPal's support of iZettle to challenge Square in the U.S. SQUARE DEBT OFFERING: Late Monday, Square announced a $750M convertible note offering "for general corporate purposes." After Square announced that it will be offering $750M of convertible senior notes due in 2023, Morgan Stanley's analyst Faucette said he believes the offering could help drive more M&A to support international expansion, especially following PayPal's acquisition of iZettle, which could drive an increased sense of urgency. Faucette kept an Equal Weight rating on Square shares.

PRICE ACTION: Shares of Square are down 1.9% while shares of rival PayPal also dropped over 1.1% in midday trading.