Klarna has agreed on a major new distribution partnership with fellow fintech unicorn Stripe to expand its reach and add more merchants ahead of its listing in the United States.
The media, referring to representatives of the mentioned companies, published information according to which Klarna’s Buy Now, Pay Later (BNPL) service will be available as a payment option for merchants using Stripe payment tools in 26 countries.
It is worth noting that in this case, there is not the first example of cooperation between the specified firms, which is dual-headquartered in San Francisco. In 2021, during the coronavirus pandemic, when the fintech sector was showing strong growth, Stripe announced that Klarna would offer its BNPL plans to the company’s merchants, but in a limited volume.
The new deal provides improved functionality for Stripe’s merchants, including the ability of A/B tests from the Swedish brand and measure conversion rates in real-time.
Last year, Klarna offloaded its own online checkout business, Klarna Checkout, to a consortium of investors.
BNPL plans are installment loans that allow consumers to purchase something on an online platform or in a regular physical store and then pay off their debt either later or in equal monthly installments. Over the years, the relevant functional offers have become a popular way to spread the cost of everyday purchases.
A new stage of partnership with Stripe gives Klarna a big boost when the company prepares for the long-awaited initial public offering (IPO) of shares. In November, the Swedish fintech sector player confidentially filed for an IPO in the United States. Last year, the media reported that Klarna could be valued at $20 billion.
Klarna earns from the fees that retailers pay for each transaction processed through the company’s platform. In return for giving the Swedish brand visibility as a payment option in its checkout tools, Stripe will get a share of the money Klarna makes from a given transaction.
Klarna did not disclose the financial terms of its deal with Stripe.
David Sykes, the Swedish company’s chief commercial officer, said that the specified partnership is really significant for the brand. Also in this context, it was noted that the firm has already doubled the number of new merchants in the three months since it began implementing the new Stripe integration in October. Moreover, David Sykes stated that Klarna added 100,000 new merchants in 2024, and is already seeing the growth rate increase with this agreement.
Last time, analysts valued the Swedish company, founded in 2005, at $15 billion. In 2021, Klarna was in the condition, which in a certain sense can be called the peak of development. It is worth noting that in this case, the mentioned wording implies the best period in the company’s existence as of today, rather than stating that the firm has already reached the highest point of its progress and will no longer be able to repeat or exceed the corresponding indicators. In the specified year, the firm was valued at $46 billion as part of a funding round led by SoftBank’s Vision Fund 2, driven by the circumstances of the coronavirus pandemic related to the transition of many processes into a virtual format.
In 2022, Klarna took an 85% haircut in a new funding round. At that time, the company was valued at $6.7 billion.
The deal also may help to increase Stripe’s revenue.
BNPL proponents tout these plans as a way to boost the overall transaction level, as buyers can purchase more goods over a shorter period and then pay them off over a longer period.
The results of a study conducted by Stripe last year showed that companies offering BNPL to consumers as a payment method receive 14% more revenue from increased conversions and rising average order values.
Jeanne Grosser, chief business officer of Stripe, said during a conversation with media representatives that last year the volume of BNPL payments on the firm’s platform increased by 172%, which is much faster than other mainstream payment methods. It was also noted that the deal with Klarna is a win-win for both companies.
It’s worth mentioning that rumors have been circulating for a long time that Stripe could be an IPO candidate. The corresponding messages suggested that this should happen in the near term. So far, the rumors have not been confirmed by reality. Moreover, the company said it does not intend to rush to conduct an IPO. It is possible that the mentioned official position of the firm is a signal that listing in this case should not be perceived as a prospect of the foreseeable future.
Stripe is one of the victims of the slump in fintech valuations. In 2023, the company slashed its valuation to $50 billion. In this case, there is a significant drop in the indicator. In 2021, Stripe’s market capitalization was fixed at $95 billion. In this case, there is a telling example of how significant the impact of what might be called an external conditions factor can be. Last year, the media released information according to which the company’s valuation rebounded to the $70 billion mark as part of the secondary share sale.
As we have reported earlier, Klarna and eBay Bring BNPL to New Markets.
