Klarna has entered into a significant new partnership with Stripe, a leading fintech company, aiming to enhance its global reach and attract more merchants as it prepares for its highly anticipated U.S. stock market debut.
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| Jakub Porzycki | NurPhoto | Getty Images |
Through this collaboration, Klarna’s popular "buy now, pay later" (BNPL) service will be integrated into Stripe’s payment platform, allowing merchants across 26 countries to offer Klarna as a payment option. The two companies confirmed this development to CNBC on Tuesday.
This partnership builds on a prior collaboration between Klarna and Stripe that began in 2021. At that time, Klarna’s BNPL plans were made available to Stripe merchants, but on a much smaller scale. The new agreement expands this relationship significantly, offering Stripe merchants enhanced functionality, such as A/B testing for Klarna and the ability to monitor real-time conversion rates.
The expanded deal comes shortly after Klarna divested its own online checkout service, Klarna Checkout, selling it to a consortium of investors last year.
BNPL plans, which allow consumers to purchase goods and pay for them later or in installments, have gained substantial traction as a flexible way for people to manage everyday expenses.
For Klarna, this partnership with Stripe is a timely boost as the Swedish fintech prepares for its initial public offering (IPO) in the United States. Klarna confidentially filed for its IPO in November, and analysts speculate it could achieve a valuation of up to $20 billion, according to a Bloomberg report from last year.
Klarna generates revenue by charging retailers fees for every transaction processed through its platform. Under the terms of the new agreement, Stripe will receive a portion of the fees Klarna earns from transactions completed through its integration with Stripe’s tools. However, Klarna declined to reveal the financial details of the deal.
David Sykes, Klarna’s chief commercial officer, described the partnership as a major milestone for the company. Speaking to CNBC, Sykes noted that Klarna had already doubled its new merchant sign-ups in the three months since it began rolling out the integration with Stripe in October.
“In 2024, we onboarded 100,000 new merchants, and we’re already witnessing an acceleration in that growth with this agreement,” Sykes added.
Klarna, which was founded in 2005, was recently valued at approximately $15 billion by analysts. This valuation marks a sharp decline from its peak of $46 billion during the fintech boom of 2021, when a funding round led by SoftBank’s Vision Fund 2 catapulted Klarna’s worth. By 2022, however, the company saw its valuation plummet to $6.7 billion during another funding round, reflecting the broader downturn in fintech markets.
Stripe, meanwhile, also stands to benefit from this partnership, potentially boosting its revenue through increased transaction volumes.
Proponents of BNPL solutions argue that they encourage consumers to shop more by enabling them to make purchases immediately while spreading the cost over time. Research conducted by Stripe last year revealed that businesses offering BNPL options saw up to a 14% increase in revenue, driven by improved conversion rates and higher average order values.
“BNPL volume on Stripe grew by an impressive 172% last year, far outpacing the growth of other mainstream payment methods,” said Jeanne Grosser, Stripe’s chief business officer. She described the partnership with Klarna as a “win-win” for both companies.
Stripe has long been considered a strong candidate for an IPO, though the company has indicated it is in no hurry to go public. Like Klarna, Stripe has also faced valuation challenges in recent years. After being valued at $95 billion in 2021, Stripe saw its valuation drop to $50 billion in 2023. However, it later rebounded to $70 billion following a secondary share sale.