Stripe and Klarna in ‘buy now, pay later’ link-up

Pay deal: Stripe co-founders Patrick and John Collison

Adrian Weckler Twitter Email

October 27 2021 02:30 AM

Stripe and the Swedish ‘buy now, pay later’ finance firm Klarna have linked up to make it easier for Stripe-using businesses to offer payment plan services from Klarna.

The two companies have also said Klarna will use Stripe’s services more for transactions in the US and Europe.

While Stripe is privately valued at $95bn (€82bn), Klarna is currently worth $46bn, making it one of Europe’s biggest financial tech companies.

Klarna’s business model, which facilitates interest-free payments to shoppers by charging retailers to use the service, has been hailed inside the tech industry but sometimes criticised outside it.

While fintech commentators have marvelled at the Swedish firm’s recent growth, it has come in for regulatory and political scrutiny in the UK as part of a wider probe into whether people become pressured into buying things they can’t afford.

“For businesses, offering this flexibility can dramatically increase conversions and boost revenue,” said Stripe in a statement. “In fact, Klarna’s research found that businesses offering Klarna at checkout generated a 30pc average increase in conversion and a 41pc increase in average order value. Some retailers discovered that 40pc of Klarna shoppers were new to their brand, allowing them to win entirely new customer segments.”

The company said the announcement includes a “deeper collaboration” between Klarna and Stripe, where the Irish-American firm founded by brothers John and Patrick Collison, will become Klarna’s preferred payments partner for consumer purchases.

This means that after a customer’s initial purchase from a retailer is funded by Klarna, subsequent repayments “are all processed by Stripe”, the company says.

“We’re thrilled to partner with Klarna so that millions of businesses on Stripe globally can offer increased payment flexibility,” said Will Gaybrick, chief product officer at Stripe.

“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.”