PayPal Holdings Inc.’s $2.2 billion acquisition of European financial-technology startup iZettle AB is being scrutinized by the U.K. antitrust watchdog over concerns the deal could lead to higher prices for payment services and reduce competition.

PayPal, which closed the deal in September, could ultimately face pressure to unwind part of the transaction that centers on the companies’ businesses in the U.K. unless it addresses the concerns from the Competition and Markets Authority in that market.