The Swedish buy now, pay later pioneer said on Tuesday that its new design would help users find the items they want using more advanced AI recommendation algorithms, while retailers would be able to target customers more effectively.
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Klarna announced a global partnership with on Wednesday Above to enable payments for the ride-hailing giant’s Uber and Uber Eats apps.
The partnership will add the Swedish financial technology company as a payment option in the US, Germany and Sweden, Klarna said in a statement.
In these countries, Klarna will introduce the “Pay Now” option in both apps, allowing customers to pay for an order immediately with one click. Users can track all of their Uber purchases in the Klarna app.
The company will also offer Uber users in Sweden and Germany an additional payment option, allowing users to bundle purchases into a single, interest-free payment that will be deducted from their monthly salary.
Interestingly, the company does not introduce “buy now, pay later” installment plans on its platforms, arguably Uber’s most popular service offering.
Klarna CEO and co-founder Sebastian Siemiatkowski said in a statement on Wednesday that the deal represents a “significant milestone” for the company.
“Consumers can quickly and securely pay Now in full, which already accounts for more than a third of Klarna’s global volume, and more easily manage their finances in one place,” Siemiatkowski said.
Klarna declined to disclose the financial terms of its deal with Uber.
Big trader profit before IPO
The Uber deal marks one of the most significant trade deals for Klarna in recent times and comes as the European fintech giant is rumored to be preparing for a blockbuster IPO that could value the company at just over $20 billion .
Klarna has held detailed discussions with investment banks to work on an initial public offering that could happen as early as the third quarter, Bloomberg News reported in February, citing unnamed sources familiar with the matter.
CNBC could not independently verify the accuracy of the report. Klarna has stated that it does not comment on market speculation.
Such an IPO would mark a turnaround for a company that saw $38.9 billion wiped from its valuation in 2022 amid worsening macroeconomic conditions fueled by Russia’s invasion of Ukraine and astronomical valuations in the tech sector went back.
Klarna reached a staggering $45.6 billion in a funding round led by SoftBank in 2021, before its market value fell to $6.7 billion in a so-called “down round” the following year.
The company recently launched a monthly subscription in the US to attract “power users” ahead of its expected IPO.
The product is called Klarna Plus and costs $7.99 per month. Klarna Plus allows users to waive service fees, earn double rewards points, and access curated discounts from partners like Nike and Instacart.
Last year, Klarna reported its first quarterly profit in four years after reducing its loan losses by 56%.
The company recorded an operating profit of 130 million Swedish krona (approximately $11.7 million) in the third quarter of 2023, making it a profit, compared to a loss of 2 billion Swedish krona (approximately $183.6 million) in the same period last year million US dollars).
Buy now, pay later – boom
Klarna is one of many buy now, pay later services that allow users to pay off their purchases over a period of monthly installments.
The payment method is becoming increasingly popular among consumers who shop online or in person. It can also be an alternative to credit cards that charge interest and high fees.
But it has also raised concerns about the affordability of such services and whether it actually encourages some consumers – particularly younger people – to spend more than they can afford.
In the UK, the government has proposed draft legislation to regulate the buy now, pay later industry.
The U.S. Consumer Financial Protection Bureau has previously said it plans to subject buy now, pay later lenders to the same oversight as credit card companies.
Meanwhile, the European Union adopted a revised version of its consumer credit directive last year to bring “buy now, pay later” services within the scope of the rules.
For its part, Klarna defends the “buy now, pay later” model, arguing that it offers customers a cheaper way to access credit compared to traditional credit cards and consumer loans.
The company also said it welcomes regulation of “buy now, pay later” products.
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2024-04-24 17:18:00
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