Klarna, a buy-now-pay-later business, aims to return to profitability by summer 2023.
Jakub Purzycki | Nour Photo | Getty Images
Klarna has agreed a major new distribution partnership with fellow fintech unicorn Stripe, in a bid to expand reach and add more merchants in the lead-up to its upcoming US listing.
Klarna's buy now, pay later (BNPL) service will become available as a payment option for merchants using Stripe's payment tools in 26 countries, the two companies told CNBC on Tuesday.
This is not the first time Klarna and Stripe have collaborated. In 2021, at its peak The fintech craze fueled by the COVID-19 pandemicStripe announced that Klarna will offer its own BNPL plans to the company's US merchants.
BNPL plans are installment loans that allow a consumer to buy something online or in a store and then pay off their debt, either at a later date or over equal monthly installments. BNPL arrangements have become a popular way for people to spread the cost of everyday purchases.
The new tie-up with Stripe gives Klarna a big boost as it prepares for a highly anticipated initial public offering. Klarna secretly filed to go public in the US in November. The company could receive a valuation of up to $20 billion, according to A Bloomberg News Report last year.
Klarna makes money from the fees retailers pay on each transaction processed through its platform. In exchange for giving Klarna visibility as a payment option in its payment tools, Stripe will get a share of the money Klarna makes from a given transaction.
Klarna declined to disclose the financial terms of its deal with Stripe.
“This is really important for Klarna,” David Sykes, Klarna's chief commercial officer, told CNBC, adding that the company has already doubled the number of new merchants in the three months since it began implementing the new integration with Stripe in October.
“We have added 100,000 new merchants in 2024 and are already seeing an increase in growth rate with this agreement.” He added.
Analysts recently valued Klarna, founded in 2005, at $15 billion. At its peak during the pandemic-led boom in fintech stocks, the company attracted A With a value of 46 billion dollars In a financing round led by SoftBank's Vision Fund 2 in 2021.
In 2022, Klarna took an 85% cut in a new round of financing that valued the company at $6.7 billion.
The deal also has the potential to generate additional revenue gains for Stripe as well.
BNPL proponents tout these plans as a way to increase the overall level of transactions, as shoppers can purchase more items over a shorter period of time and then pay them back over a longer time frame.
A study conducted by Stripe last year found that businesses offering BNPL as a payment method generated up to 14% more revenue from increased conversions and higher average order values.
“We saw BNPL volume grow 172% last year on Stripe, which is much faster than other mainstream payment methods,” Jane Grosser, chief business officer at Stripe, told CNBC, adding that the deal with Klarna was a “win-win.” “For both companies.
Stripe has long been expected to be an IPO candidate in the near term — for its part, the company says it's in no rush. The company, which was also a victim of falling fintech valuations, lowered its rating to $50 billion in 2023 from $95 billion in 2021. Company evaluation It is said It rebounded to $70 billion, as part of a secondary share sale.
