Klarna has announced a major partnership with Adyen, aimed at bringing Klarna’s BNPL instalment payment options to physical retail locations.
The collaboration marks a significant step for Klarna as it extends its BNPL service beyond the online space and into brick-and-mortar stores across North America, Europe and Australia.
The partnership will enable Klarna’s BNPL options to be available on more than 450,000 Adyen payment terminals, giving consumers the ability to spread the cost of their in-store purchases over interest-free instalments.
Klarna’s Chief Commercial Officer, David Sykes, emphasised the importance of this expansion, stating, “We want consumers to be able to pay with Klarna at any checkout, anywhere.”
Push into Physical Retail
Klarna’s move into physical stores is part of a broader strategy to offer more flexible payment options wherever consumers shop, whether online or offline.
BNPL has historically been most popular in e-commerce. Currently, BNPL accounts for around 5% of global online shopping, according to Klarna.
However, with the new partnership with Adyen, Klarna is looking to capitalise on the growing demand for BNPL in physical retail.
Adyen’s extensive reach and infrastructure make it an ideal partner for Klarna’s in-store expansion.
As one of the world’s leading payment service providers, Adyen has a global footprint, processing payments for a wide range of merchants across industries.
Alexa von Bismarck, head of EMEA at Adyen, noted that the partnership would allow retailers to offer greater flexibility at checkout, enhancing the overall consumer experience.
The partnership further builds on Klarna and Adyen’s existing collaboration in the online payments space, where Klarna has been a payment option for e-commerce transactions processed by Adyen’s platform.
The companies’ decision to extend their collaboration to physical retail represents a significant step in offering omnichannel payment options to consumers.
A Key Step Towards Klarna’s IPO
Klarna’s expansion into physical retail comes at a time when the company is reportedly exploring an initial public offering (IPO) in 2024.
The company has been growing rapidly, expanding its suite of services and its geographic reach in preparation for a potential IPO.
Earlier this year, Klarna introduced Klarna Balance, a checking account-like product, as well as cashback rewards programs, in an effort to entice consumers to move more of their financial lives onto its platform.
While Klarna has yet to confirm a fixed timeline for going public, its CEO, Sebastian Siemiatkowski, told CNBC that an IPO in 2024 was not “impossible.”
The partnership with Adyen, along with other recent strategic moves, underscores Klarna’s ambitions to diversify its offerings and cement its position as a leading player in the payments space.
Criticism of BNPL
Although BNPL is growing rapidly, it has also faced criticism from consumer rights advocates.
Concerns have been raised that BNPL encourages consumers to spend more than they can afford, leading to debt accumulation, particularly among younger users.
Research found that BNPL options are especially appealing to consumers living paycheck to paycheck. Of those facing difficulties paying bills, 26% said they were highly likely to use BNPL in the next 12 months.
Regulators are taking notice. In the UK, the newly elected Labour government is expected to introduce regulations for the BNPL sector soon, following multiple delays under the previous Conservative government.
These regulations will likely aim to increase transparency and protect consumers from potential financial risks associated with instalment payment plans.
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