Klarna's buy now, pay later business aims to return to profits by summer 2023.
Jakub Porzycki | NurPhoto | Getty Images
Klarna has entered into a major new distribution partnership with fellow fintech unicorn Stripe to expand its reach and add more sellers on the eve of its upcoming US stock exchange listing
The Swedish company's buy now, pay later (BNPL) service will be available as a payment option for merchants using Stripe's payment tools in 26 countries, the two companies told CNBC on Tuesday.
This isn't the first time Klarna and Stripe, which has two headquarters in San Francisco, have partnered. In 2021, on high Fintech craze caused by the Covid-19 pandemicStripe has announced that Klarna will offer its BNPL plans to the company's merchants – but on a more limited basis.
The new agreement provides improved functionality for Stripe merchants, including the ability to A/B test Klarna and measure conversion rates in real time.
BNPL plans are installment loans that allow a consumer to buy something online or in store and then repay the debt at a later date or in equal monthly installments. BNPL contracts have become a popular way to spread the cost of everyday purchases.
The new merger with Stripe gives Klarna a big boost as it prepares for its hotly anticipated initial public offering. Klarna confidentially filed for an initial public offering in the United States in November. According to AA, the company could reach a valuation of up to $20 billion Bloomberg News last year's report.
Klarna makes money from the fees merchants pay for each transaction processed through its platform. In exchange for allowing Klarna to appear as a payment option in its checkout tools, Stripe will receive a portion of the money Klarna earns on that transaction.
Klarna declined to disclose the financial terms of the deal with Stripe.
“This is really significant for Klarna,” David Sykes, Klarna's chief commercial officer, told CNBC, adding that the company has already doubled its number of new sellers in the three months since it began rolling out its new Stripe integration in October.
“We have added 100,000 new sellers in 2024 and we are already seeing an increase in growth rates with this deal.” he added.
Analysts recently valued Klarna, founded in 2005, at $15 billion. At its peak, during the pandemic-induced increase in fintech stock prices, the company attracted approx valued at $46 billion in a financing round led by SoftBank's Vision Fund 2 in 2021.
In 2022, Klarna took an 85% cut in value in a new round of financing that valued the company at $6.7 billion.
The deal could also provide additional revenue growth for Stripe.
BNPL supporters tout these plans as a way to increase overall transaction levels because buyers can buy more items in a shorter period and then pay them off over a longer period.
A study by Stripe last year found that companies offering BNPL as a payment method generated up to 14% more revenue thanks to increased conversions and higher average order value.
“We saw BNPL volume on Stripe grow by 172% last year, which is much faster than other popular payment methods,” Jeanne Grosser, Stripe's chief business officer, told CNBC, adding that the deal with Klarna was a “win-win.” . “for both companies.
It has long been speculated that Stripe would soon be an IPO candidate – but the company claims it is in no hurry. The company, also a victim of the collapse in fintech valuations, lowered its valuation to $50 billion in 2023 With $95 billion in 2021. Company valuation apparently rebounded to $70 billion in secondary share sales.
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