Klarna and Adyen Collaborate to Expand Buy Now, Pay Later to Physical Stores
Klarna, a leading “buy-now, pay-later” firm, has announced a strategic partnership with Adyen, a Dutch payments fintech company, to introduce its popular buy now, pay later service into brick-and-mortar retail locations. This move marks a significant expansion for Klarna, as it seeks to return to profitability by the summer of 2023.
The agreement between Klarna and Adyen will allow Klarna’s payment products to be integrated into physical payment terminals used by Adyen’s merchant partners. With over 450,000 Adyen payment terminals set to offer Klarna as a payment option, customers will now have the flexibility to utilize Klarna’s buy now, pay later service in-store. Initially launching in Europe, North America, and Australia, the partnership aims for a broader rollout in the future.
Klarna’s buy now, pay later service enables users to split the cost of their purchases into interest-free installments, a feature that has gained popularity in the online shopping realm. Online shopping currently represents around 5% of the global e-commerce market, with Klarna at the forefront of providing flexible payment solutions to consumers.
Expanding into physical retail locations is a strategic move for Klarna and other players in the buy now, pay later sector, such as Block’s Afterpay, Affirm, Zip, Sezzle, and Zilch. By targeting consumers in-store, these companies are looking to extend their reach and cater to customers who prefer traditional shopping experiences.
David Sykes, Chief Commercial Officer at Klarna, expressed the company’s commitment to providing seamless payment options for consumers. He stated, “We want consumers to be able to pay with Klarna at any checkout, anywhere.” The collaboration with Adyen is a significant step towards achieving this goal and delivering flexible payment solutions to customers in physical retail settings.
Alexa von Bismarck, Adyen’s head of EMEA, highlighted the importance of offering consumers flexibility at the checkout. She emphasized that consumers value brands that allow them to pay in a way that suits their preferences, underscoring the significance of providing diverse payment options in today’s retail landscape.
Earlier this year, Klarna divested its online checkout solution, Klarna Checkout, to focus on enhancing its core offerings and expanding its reach. This strategic decision positioned Klarna to collaborate more closely with payment gateways like Adyen, Stripe, and Checkout.com, facilitating seamless payment experiences for consumers across various platforms.
Klarna’s partnership with Adyen comes at a pivotal moment for the Swedish tech company, as it explores the possibility of an initial public offering (IPO). While a specific timeline for the IPO has not been set, Klarna’s CEO Sebastian Siemiatkowski hinted at a potential IPO in 2024, signaling the company’s growth trajectory and market ambitions.
In addition to its collaboration with Adyen, Klarna has introduced innovative products like Klarna Balance, a checking account-like feature, and cashback rewards to incentivize consumers to engage more with its platform. These initiatives aim to enhance the overall customer experience and solidify Klarna’s position as a leading player in the fintech space.
Despite the popularity of buy now, pay later services, the sector has faced scrutiny from consumer rights advocates and regulators over concerns about encouraging excessive spending. Regulators are advocating for regulations to govern the rapidly expanding buy now, pay later industry, ensuring consumer protection and financial responsibility.
The U.K. Labour government is expected to unveil new proposals for buy now, pay later regulation in response to mounting concerns. City Minister Tulip Siddiq has underscored the government’s commitment to establishing guidelines that promote responsible lending practices and safeguard consumer interests in the evolving payment landscape.
As Klarna and Adyen join forces to expand buy now, pay later services to physical stores, the collaboration signifies a broader trend towards offering flexible payment solutions across various retail channels. By leveraging their expertise and technological capabilities, Klarna and Adyen are poised to transform the retail payment experience and meet the evolving needs of consumers in an increasingly digital and interconnected world.