Klarna, a Swedish Buy Now, Pay Later (BNPL) company, has announced a significant distribution partnership with Stripe, an Irish-American multinational financial services and SaaS company.
This deal will open doors for Klarna Stripe partnership and offer flexible payment solutions across 25 countries using Stripe’s financial infrastructure platform. It will also boost merchant growth by integrating Klarna BNPL options, which will, in turn, improve customer conversion rates and increase average order values.
Key Takeaways
- With this partnership, Klarna gets access to Stripe’s millions of merchants across 25-26 countries. This expanded distribution will give Klarna significantly boost in establishing a global footprint. It will also help accelerate merchant adoption – which became evident by a reported doubling of new merchant sign-ups in recent quarters.
- This deal will leverage Stripe’s unified payment infrastructure, which means businesses can add Klarna’s BNPL options without extra coding or onboarding. Merchants can quickly test and deploy Klarna’s payment solutions to improve checkout conversions and overall sales performance.
- Klarna and Stripe’s deal is structured strategically to drive incremental revenue for both companies. Merchants adding Klarna’s flexible payment plans are seeing as high as a 14% revenue increase and higher average order value. Additionally, shared transaction revenue models align growth incentives for both companies.
- The timing of this deal is also a highlight, as Klarna is preparing for its multi-billion IPO. The deal will significantly benefit Klarna’s market position ahead of the public offering and give investors confidence by showing robust, scalable growth.
Klarna Stripe Joins Forces to Expand Payment Services
The payments ecosystem has experienced a paradigm shift in consumer payment preferences in the past decade. Credit card models, which once dominated the market, are now being complimented (or even replaced) by more flexible payment options. BNPL has come out as the solution to cater to this evolving market demand by offering consumers a way to make purchases and pay them over time (usually in 4-6 months), without paying interest or fees.
Klarna has been the frontrunner in the BNPL space, offering consumers multiple payment options – including immediate payments, short-term interest-free installments, and longer-term financing – leading to lower cart abandonment rates and increased revenue. On the other hand, Stripe is a known financial infrastructure platform based in the US. The company offers tools that simplify payment processing, billing, and financial management. Stripe enables businesses to scale efficiently.
The Klarna Stripe partnership represents a strategic alignment of two fintech powerhouses. By integrating Klarna’s payment solutions into Stripe’s platform, merchants can offer their customers flexible payment options without complex implementations. Stripe has introduced a groundbreaking feature that enables businesses to instantly do A/B testing with various payment methods, such as Klarna, without coding. This lets merchants directly assess how Klarna affects their sales relative to other payment options.
This Klarna Stripe partnership integration is designed to be frictionless, allowing businesses to activate Klarna’s services directly through the Stripe Dashboard.
David Sykes, the Chief Commercial Officer of Klarna, highlighted the importance of their Klarna Stripe partnership partnership, noting Klarna’s role as a vast global network linking 85 million active users with various retailers. He explained that expanding their retailer base enhances consumer attraction, creating a mutually beneficial cycle. Klarna’s goal is to ensure its payment solutions are ubiquitously available for every purchase at any time. He regards Stripe as an ideal distribution ally, favored by Fortune 500 corporations and the most innovative startups worldwide.
In Klarna’s payment network, instant transactions represent 30% of all processed payments, with the balance consisting of interest-free BNPL offerings and extended financing solutions.
Implementing consumer protection safeguards has led to lower default rates than those seen with conventional credit products, thereby solidifying Klarna’s stance in the consumer finance industry.
The Klarna Stripe partnership, first established in 2021, supports retailers worldwide by providing more flexible payment options to their customers, which helps increase revenue. After Klarna sold its Checkout business to investors in 2023, Stripe began earning a portion of the transaction fees from the integrated services, although the exact financial details are not public.
In 2023, the volume of BNPL transactions on Stripe’s platform increased by 172% over traditional payment methods, underscoring a growing demand among merchants for installment payment options.
Since October 2024, Klarna’s network has expanded to include 100,000 new merchants, who now have access to its 85 million active consumers across multiple markets.
Jeanne DeWitt Grosser, Chief Business Officer at Stripe, reiterated the sentiment, stating that Stripe has become the most straightforward method for businesses to incorporate Klarna. She highlighted that the collaboration would enable enterprises to use Stripe to increase revenues and provide consumers with additional payment options.
The partnership’s impact is already evident. In the fourth quarter of 2024, Klarna experienced a doubling in the number of new merchants adopting its services compared to earlier quarters. A recent analysis by Stripe revealed that businesses adopting BNPL services like Klarna have experienced revenue increases of as much as 14%.
Businesses leveraging Stripe’s platform in 25 countries can now instantly offer Klarna’s payment options to their customers. This extensive reach ensures that merchants across various markets can cater to the diverse payment preferences of their clientele, thereby enhancing the overall shopping experience.
Merchants can now also monitor conversion rates in real time and evaluate the impact on revenue using integrated analytics tools.
This agreement is set to boost Klarna’s revenues as the company has recently submitted a confidential IPO filing. While Stripe is also seen as a potential IPO contender, it has expressed no urgency to go public.
Established in 2005, the Swedish fintech firm saw its valuation peak at $46 billion in 2021 before dropping to $6.7 billion in 2022. Market analysts believe this partnership could fortify Klarna’s position as it approaches its public debut. Deutsche Bank analysts estimated Klarna’s valuation to be $14.6 billion upon its IPO filing.
This valuation correlates with an adjustment in the value of Chrysalis Investments’ stake in Klarna, which is now assessed at approximately $153.6 million.
About Klarna
Klarna, founded in 2005 by Sebastian Siemiatkowski, Victor Jacobsson, and Niklas Adalberth, is a Swedish fintech company headquartered in Stockholm. The company specializes in providing online financial services, particularly in the BNPL sector, offering users flexible payment plans such as direct payments, pay-after-delivery, and installment plans. These services are integrated into a seamless one-click purchase experience, enhancing users’ online shopping journey. Over the years, Klarna has expanded its reach, partnering with over 500,000 merchants and serving over 85 million consumers across 26 countries.
In recent developments, Klarna has been preparing for an initial public offering (IPO) in the United States, with plans to go public in April 2025. The company is targeting a valuation of up to $15 billion, making it one of the most extensive listings of the year. This move comes after significant growth and strategic initiatives, including integrating artificial intelligence to streamline operations and enhance customer experiences. Despite facing challenges in the past, such as a valuation drop from $46 billion in 2021 to $6.7 billion in 2022, Klarna has demonstrated resilience by narrowing its losses and moving closer to annual profitability. The upcoming IPO is anticipated to further solidify Klarna’s position in the global fintech space.
About Stripe
Stripe, founded in 2010 by Irish brothers Patrick Collison and John Collison, is a prominent financial technology company that provides economic infrastructure for the Internet. Headquartered in South San Francisco, California, and Dublin, Ireland, Stripe offers a comprehensive platform enabling businesses of all sizes – from startups to large enterprises – to accept online payments and manage their operations seamlessly. The company’s suite of products includes payment processing, billing, fraud prevention tools, and customizable financial solutions, all designed to facilitate and secure online transactions.
Over the years, Stripe has experienced significant growth and expansion. As of 2023, the company employs over 8,000 people and operates in more than 45 countries, supporting over 135 currencies and payment methods. In 2022, businesses utilizing Stripe processed over $817 billion in payments. The company’s impressive client roster includes industry leaders such as Spotify, Google, and Facebook, underscoring its reputation as a trusted partner in the digital economy. Stripe’s mission is to increase the GDP of the internet by providing robust and scalable financial tools that empower businesses worldwide.
Conclusion
The Klarna-Stripe partnership marks a significant milestone in the evolving payments landscape. By combining Klarna’s flexible BNPL solutions with Stripe’s robust financial infrastructure, merchants across 25+ countries can offer seamless payment options that enhance customer experience and drive revenue growth. The integration simplifies implementation for businesses and provides real-time analytics to measure impact, reinforcing the demand for installment-based payment methods.
With Klarna’s IPO on the horizon and Stripe continuing to expand its market presence, this collaboration positions both companies for sustained growth. As BNPL adoption rises, the Klarna-Stripe alliance is set to play a key role in shaping the future of digital payments, benefiting merchants, consumers, and investors alike.
