Stripe, an online payment processor, has entered into a strategic partnership with Klarna, a “buy now, pay later” company, making it easy for retailers to add options for customers to pay in installments.
The alliance takes place in the face of intensifying competition in the BNPL market, which offers short-term, interest-free credit, subject to full repayments on time and growing concerns about consumer welfare.
Koen Köppen, Chief Technology Officer of Klarna, said:
This integration will allow retailers in Europe, the United Kingdom and the United States using Stripe to add the Klarna option at checkout, which was previously a difficult process. Klarna said retailers can decide how products will be delivered to consumers at checkout.
During the pandemic, the demand for BNPL surged. According to a report by consultancy Bain, UK BNPL transaction value reached £ 6.4 billion in 2020, an increase of 60-70% over the previous year.
ClarnaRecently, worth $ 46 billion in an investment round led by Softbank in Japan, it has rapidly entered new markets, including the United States, and surged operating losses before listing on the stock market.
Partnership with StripesBecoming the most valuable private company in Silicon Valley in March reflects the acquisition of BNPL provider Afterpay by settlement company Square in August. The $ 29 billion transaction is Australia’s largest acquisition in history.
Other players are also trying to enter the BNPL space. Digital banks Monzo and Revolut will soon allow customers to distribute card payments in installments, while PayPal launched the UK’s BNPL service last year.
However, regulators and consumer groups have expressed concern about potential risks to their customers. There are concerns about how providers can effectively assess client credit and users can build up large debts across different lenders.
Critic The BNPL also claims to encourage young people and vulnerable people to spend money they don’t have. Last December, the UK Advertising Standards Authority banned some Klarna ads that “irresponsibly encouraged the use of credit to improve people’s mood” and made BNPL a kind of debt to all providers. Introduced guidelines that require clarification.
These fears have already led to law in some countries. In Sweden, the domestic market of Clarna, it is illegal to offer BNPL before other options after 2020. HM Treasury began a market review earlier this month after a report commissioned by a financial oversight agency called for “very urgent” intervention.
Klarna and Stripe Announce “Buy Now, Pay Later” Partnership
Source link Klarna and Stripe Announce “Buy Now, Pay Later” Partnership