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• Stripe and Klarna announced a partnership that would open the payment technologies and the market to each other
• The deal would allow Stripe to capitalize on the fast-growing BNPL trends
Stripe and Klarna, two of the world’s biggest private fintech companies, on Tuesday announced a partnership to provide the ‘buy now, pay later’ feature as competition heats up.
While Stripe said the partnership would help the Irish-American company integrate Klarna’s payment methods, including pay later options, Klarna said it would allow the Swedish company to use Stripe’s infrastructure to accept credit card payments.
The deal will allow Stripe to operate in the European markets where Klarna is currently operating and give Klarna access to the markets in U.S. and Canada.
“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.
Payment integration
Stripe, which helps businesses accept payments online, said the deal would make it easier for retailers to add Klarna as a payment option on their website.
Klarna, one of the biggest names in the European fintech sector due to its buy now, pay later (BNPL) service, typically partners with stores directly to embed its checkout button.
The Swedish firm lets users split the cost of their purchases over up to 36 months. However, its most notable feature is “Pay in 4,” which allows users to pay for a product in interest-free installments over four months.
BNPL industry
Critics have accused BNPL companies of encouraging users, especially younger customers, to spend more than they can afford.
Even the UK government has suggested regulating the emerging industry to protect consumers from potential financial harm.
Stripe’s deal with Klarna would allow both the companies to capitalize on a fast-growing trend as rivals like Square and PayPal are making big moves in the space.
While Square, in August, said it will buy Australia’s Afterpay for $29 billion, PayPal, in September, announced to acquire Japanese firm Paidy for $2.7 billion, even though it has its own BNPL service.
As per the last valuation, while Stripe is the world’s largest privately-held fintech startup valuing at about $95 billion, Klarna is the second-biggest globally, with a market value of nearly $46 billion.
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