Klarna, a “buy now, pay later” company, aims to be profitable by summer 2023.
Jakub Porzycki | Null Photo | Getty Images
Klarna has agreed a major new distribution partnership with fellow fintech unicorn Stripe, with the aim of expanding its reach and adding more merchants ahead of its upcoming U.S. 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 companies told CNBC on Tuesday.
This isn’t the first collaboration between Klarna and Stripe, which has dual headquarters in San Francisco. In 2021, at the height of the fintech boom fueled by the Covid-19 pandemic, Stripe announced that Klarna would offer BNPL plans to its merchants, but in a more limited way. It was.
The new deal includes improved features for Stripe sellers, including Klarna’s A/B testing and real-time conversion rate measurement capabilities.
A BNPL plan is an installment loan that allows consumers to buy something online or in a store and repay the debt at a later date or in the same monthly installments. BNPL arrangements have become a popular way for people to spread the costs of everyday purchases.
The new partnership with Stripe is a major boost for Klarna as it prepares for its much-anticipated initial public offering. Klarna secretly filed for an IPO in the US in November. A Bloomberg News report last year said the company’s valuation could reach $20 billion.
Klarna makes money from the fees retailers pay for each transaction processed through its platform. In exchange for giving Klarna visibility as a payment option in its checkout tool, Stripe will receive a cut of the money Klarna earns from certain transactions.
Klarna declined to disclose the financial terms of its deal with Stripe.
“This is very important to Klarna,” David Sykes, Klarna’s chief commercial officer, told CNBC, adding that in the three months since the company launched its new integration with Stripe in October, He added that the number of new franchisees has already doubled.
“We have already confirmed that this deal will further increase our growth rate with the addition of 100,000 new merchants in 2024,” he added.
Analysts recently valued Klarna, which was founded in 2005, at $15 billion. At the peak of the pandemic-driven fintech stock rally, the company raised a $46 billion valuation in 2021 in a funding round led by SoftBank’s Vision Fund 2.
In 2022, Klarna takes an 85% haircut in a new funding round, valuing the company at $6.7 billion.
The deal could also result in increased revenue and profits for Stripe.
Proponents of BNPL tout these plans as a way to increase overall transaction levels, as shoppers can buy more items in a short period of time and then repay them over a longer period of time. .
Research conducted by Stripe last year found that businesses that offer BNPL as a payment method generate up to 14% more revenue through increased conversions and higher average order values.
Jeanne Grosser, Stripe’s chief business officer, told CNBC: “At Stripe, BNPL transaction volume grew 172% last year, which is much faster than any other mainstream payment method.” It added that the deal with Klarna was a “win-win”. ” Both companies.
Stripe has long been speculated to be an IPO candidate in the near future, but the company says it’s in no rush. The company has also been a victim of the fintech valuation downturn, reducing its valuation from $95 billion in 2021 to $50 billion in 2023. The company’s valuation was reportedly restored to $70 billion as part of a secondary stock sale.
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