"Being a startup ourselves we always encourage entrepreneurship, including innovation in the payments space. In this case, unfortunately, their very similar company name – in combination with also being in the same industry- risked confusing both our and their users. We believe that changing their name will benefit the both of us and we wish them all the best with Droplet."
The problem is that the larger entity is more likely to have the resources to engage in litigation which in itself means smaller entities are less likely to fight back.
Trade mark litigation is often costly due to the need for survey evidence to show confusion amongst consumers. One benefit of going via OHIM (rather than the courts) is that costs are limited in this regard and you can get an early determination from OHIM as to whether there is a likelihood of confusion between the marks.
For example, if you applied for the 'Settle' mark at OHIM, and iZettle challenged, you would have limited costs exposure to the other side if you lost (although on the flipside, limited recovery if you won). Somewhat besides the point in the current case but I thought it an interesting point to include in my comment.
At least the existing trade marks incorporating 'Droplet' are in much more dissimilar areas so you are less likely to face issues with the incumbents.
Just checked to see if zettle is a Swedish word for settle, nope.
I don't know the history of iZettle or Settle, but it seems like iZettle is much further along. I don't know about UK trademarks, but iZettle applied for their US one in 2011. I didn't find a "Settle" mark at all in the US. Given all of that, and that they are both in the "payment processor" category, I could easily see a court siding with iZettle on this one.
Still sucks to have to change a name though...