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Stripe and Klarna are collaborating in 20 countries to offer Klarna’s BNPL service to enter the competitive and popular repayment sector.
Irish-American payment processing company Stripe is partnering with Swedish fintech company Klarna on a buy now, pay later (BNPL) scheme. Under the new partnership, Klarna’s flexible payment options will be available to millions of US internet businesses on Stripe. In addition, up to 19 countries in Europe will also have access to the aforementioned service.
Stripe is now Klarna’s preferred payments partner for consumer purchases in the US and Canada. In other words, the payment processing company will process all subsequent repayments funded by Klarna on its customers’ initial retail purchases. According to reports, Stripe gets to process 90% of Klarna’s payment volume in the US and Canada.
The joint announcement, via a press release on Tuesday, pairs two of the world’s most valuable financial technology startups. Furthermore, and most notably, this partnership comes at a time when business rivals are striking highly lucrative deals. This is all in a bid to stake out a share of the increasingly competitive and popular repayment sector. Stripe’s chief product officer Will Gaybrick commended Klarna’s resources as a veritable enabler for online businesses to enhance their presence and profitability:
“Klarna’s payment options are a powerful tool for online businesses to attract more customers, boost conversion rates, increase basket sizes, and thus grow their revenue.”
Stripe and Klarna Look Confidently to the Future of Ecommerce
With a $95 billion valuation, Stripe competes with other payment processing platforms such as Square Inc (NYSE: SQ) and PayPal Holdings Inc (NASDAQ: PYPL). Recently, both payment companies have inked deals with two Klarna rivals. In August, Square acquired Australian buy-now, pay-later company Afterpay Limited back in August for $29 billion. Also, PayPal acquired Japanese online payment platform Paidy for $2.7 billion in September.
Klarna, last valued at $46 billion, acknowledges that its partnership with Stripe is the largest in the company’s history. According to the Swedish payment platform, it has done partnerships like this, but “never at this type of scale”. Furthermore, CTO Köppen opines that this deal will impact and further accelerate the company’s US growth in the near future. Previous Klarna e-commerce partners include Adyen NV, Adobe Commerce, and Verifone.
Tuesday’s announcement comes after Klarna announced changes to its services in the UK in anticipation of impending new regulations. Pursuant to the changes, the payment company will use BNPL as credit facility that incurs penalties for missed payments.
Also, Klarna’s chief technology officer Koen Köppen talked up the boundless and fruitful partnership between both e-commerce ventures. According to Köppen:
“Over the past years, Klarna and Stripe redefined the eCommerce experience for millions of consumers and global retailers. Together with Stripe, we will be a true growth partner for retailers of all sizes, allowing them to maximize their entrepreneurial success through our joint services.”
Furthermore, Köppen concluded that both retailers and consumers win by affording more “convenience, flexibility and control” to shoppers through this partnership.