Stripe and Klarna, two of the world’s biggest private
fintech companies, are teaming up.
Stripe said Tuesday it has agreed a strategic partnership
with Klarna to offer the Swedish firm’s buy now, pay later payment method to
its merchants.
“Together with Stripe, we will be a true growth partner for
our retailers of all sizes, allowing them to maximize their entrepreneurial
success through our joint services,” said Koen Koppen, Klarna’s chief
technology officer.
Stripe, which helps businesses accept payments online, said
the tie-up would make it easier for retailers to add Klarna as a payment option
on their website. Klarna typically partners with stores directly to embed its
checkout button. The move could give Klarna a much wider reach of customers.
Founded in 2005, Klarna has become one of the biggest names
in European tech recently thanks to the massive surge in demand for its buy
now, pay later (BNPL) service, which lets users spread the cost of their purchases
over a period of interest-free installments.
Klarna makes money from deals with retailers, which pay the
company a small cut on each transaction processed through its platform. Stripe
said early results showed merchants saw a 27% increase in sales on average
after integrating with Klarna, while average order value climbed 41%.
Critics have accused BNPL companies of encouraging customers
— particularly younger ones — to spend more than they can afford. In the U.K.,
the government has made proposals to regulate the nascent industry to protect
consumers from potential harms.
Britain’s Treasury last week kicked off a consultation
inviting views on the regulation.
Stripe’s deal with Klarna could be a way for the payments
giant to capitalize on a fast-growing trend as rivals like Square and PayPal
make big moves in the space. Square recently agreed to acquire Australia’s
Afterpay for $29 billion, while PayPal has its own BNPL service and is buying
Japanese rival Paidy for $2.7 billion.
As well as partnering globally, Stripe and Klarna said they
were also strengthening their relationship in North America. Stripe is now used
in about 90% of Klarna’s payment processing volume in the U.S. and Canada, the
companies said.
Last valued at $95 billion, Stripe is the world’s largest
privately-held fintech start-up, according to CB Insights data. Klarna is the
second-biggest globally, with a market value of nearly $46 billion. Both
companies are expected to go public in the near future.
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