Klarna strikes global payment deal with Stripe ahead of successful IPO

Klarna has agreed a major new distribution partnership with fellow fintech unicorn Stripe, in a bid to expand reach and add more merchants in the run-up to its upcoming US listing.

Klarna’s buy now, pay later (BNPL) service will be available as a payment option for merchants using Stripe’s payment tools in 26 countries, the two companies told CNBC on Tuesday.

This isn’t the first time Klarna and Stripe have partnered. In 2021, at the height of the The fintech craze driven by the Covid-19 pandemicStripe announced that Klarna would offer its BNPL plans to the US company’s merchants.

BNPL plans are installment loans that allow a consumer to buy something online or in store and then pay off their debt, either at a later date or over a period of equal monthly installments. BNPL deals have become a popular way for people to spread the cost of everyday purchases.

The new partnership with Stripe gives Klarna a big boost at a time when it is preparing for a highly anticipated initial public offering. Klarna confidentially filed an initial public offering (IPO) in the United States in November. The company could reach a valuation of up to $20 billion, according to a Bloomberg News report last year.

Klarna makes money from the fees retailers pay for each transaction processed through its platform. In exchange for giving Klarna visibility as a payment option in its payment tools, Stripe will get a share of the money Klarna earns from a given transaction.

Klarna declined to disclose the financial terms of its deal with Stripe.

“This is really significant for Klarna,” David Sykes, Klarna’s chief commercial officer, told CNBC, adding that the company has already doubled the number of new merchants in the three months since it began rolling out the new integration with Stripe in October.

“We added 100,000 new merchants in 2024 and are already seeing the growth rate increase with this deal.” he added.

Analysts recently valued Klarna, founded in 2005, in the $15 billion range. At its peak during the pandemic-fueled surge in fintech stocks, the company attracted a $46 billion valuation in a funding round led by SoftBank’s Vision Fund 2 in 2021.

In 2022, Klarna took an 85% cut in a new funding round that valued the company at $6.7 billion.

The deal also has the potential to generate increased revenue for Stripe.

BNPL advocates promote these plans as a way to increase the overall level of transactions, as buyers can purchase more items over a shorter period of time and then pay for them over a longer period of time.

A study Stripe conducted last year found that companies offering BNPL as a payment method generated up to 14% more revenue due to higher conversion and higher average order values.

“We’ve seen BNPL volume grow 172% last year on Stripe, which is much faster than other conventional payment methods,” Jeanne Grosser, Stripe’s chief commercial officer, told CNBC, adding that the deal with Klarna was a situation in which everyone wins. ” for both companies.

Stripe has long been speculated to be a near-term IPO candidate; However, for its part, the company says it is in no rush. The company, also a victim of a drop in fintech valuations, cut its valuation to 50 billion dollars in 2023 of 95 billion dollars in 2021. The valuation of the company. reportedly recovered to $70 billion, as part of a secondary share sale.