Buy now pay later (BNPL) payment is the most thriving trend of recent times. During the COVID-19 health crisis, BNPL services gained special momentum, mainly in the developed world. However, the growing interest and usage of BNPL service among the younger population is rising in emerging countries.
Many fintech companies are entering this space to try out their luck and grab a share of the pie. Consequently, the merger and acquisition activities are rising. For instance, Square acquired Afterpay, similarly PayPal, apart from having its own BNPL service, also bought Japanese rival Paidy to capture the Japanese BNPL market. All are in fierce competition to get one’s market share. Stripe is no wonder entering into the field with this strategic partnership with Klarna to boost more business conversions and thus, increase revenue.
Stripe, a global technology company building economic infrastructure for the internet, and Klarna, the Swedish shopping and flexible payment provider, entered into a strategic partnership in October 2021. Klarna offers BNPL service to online consumers, where the person can enjoy the product without making an upfront payment for it, instead of spreading out throughout interest-free installments.
Stripe intends to enjoy Klarna’s BNPL payment method via the millions of businesses running on Stripe payment platform across 20 different countries. The partnership is to help consumer purchases, i.e., after the customer made their initial purchase from a retailer, it is funded by Klarna and subsequently, all the repayments processed by Stripe.
It is expected that Klarna to shift more payment volume to Stripe after the success of the initial test. Additionally, the partnership is projected to allow Stripe to process the bulk of Klarna’s payment volume in the US and Canada through this partnership. The strategic partnership is expected to support Stripe’s merchant partners to accept the BNPL payment option on their website. Likewise, it is likely to help Klarna to embed its check-out button in its partner network.