Klarna and Adyen Join Forces to Bring ‘Buy Now, Pay Later’ Payment Options to Over 450,000 Physical Retail Stores Globally
Fiona Nanna, ForeMedia News
6 minutes read. Updated 8:29AM GMT Thurs, 26 September, 2024
In a significant move for the global fintech industry, Swedish giant Klarna has announced a groundbreaking partnership with Dutch payments company Adyen, aimed at bringing the buy now, pay later (BNPL) revolution into physical retail stores. This development is expected to transform in-store payment experiences across Europe, North America, and Australia, offering consumers more flexible payment options at checkout.
The collaboration, announced Thursday, will see Klarna’s BNPL services integrated into more than 450,000 payment terminals operated by Adyen. Adyen’s widespread presence in brick-and-mortar locations will serve as a major boost to Klarna’s ambition of expanding its footprint beyond online shopping and into physical retail spaces.
Expanding the Reach of BNPL
Klarna’s BNPL service allows shoppers to split the cost of purchases into manageable, interest-free installments, a model that has grown immensely popular in the online shopping space. Currently, BNPL accounts for approximately 5% of global e-commerce, but Klarna, alongside other major players such as Afterpay, Affirm, Zip, Sezzle, and Zilch, is now focused on the lucrative physical retail market.
David Sykes, Klarna’s Chief Commercial Officer, expressed the company’s enthusiasm for the partnership, stating, “We want consumers to be able to pay with Klarna at any checkout, anywhere. Our strong partnership with Adyen gives a massive boost to our ambition to bring flexible payments to the high street in a new way.”
Adyen’s Alexa von Bismarck, Head of EMEA, echoed this sentiment, emphasizing the importance of consumer flexibility at checkout. “Consumers care deeply about the in-store touch point and value brands which can allow them to pay how they want,” von Bismarck said. This partnership aligns with Adyen’s goal of enhancing the consumer experience at every level.
A Strategic Step in a Growing BNPL Industry
This collaboration isn’t the first time Klarna and Adyen have worked together; the companies previously partnered on e-commerce payments. However, this new initiative represents a strategic shift as Klarna targets physical retail, which is seen as the next frontier for the BNPL industry.
The rollout of Klarna’s services through Adyen’s terminals will begin in Europe, North America, and Australia, with further expansions planned for the future. The agreement allows Klarna to significantly widen its reach and offers Adyen’s merchant partners the opportunity to integrate a popular payment method that appeals to a growing demographic of shoppers who favor flexible, installment-based payment plans.
BNPL’s Global Impact
The BNPL model, while praised for offering flexibility, has not been without controversy. Critics, including consumer rights advocates, argue that BNPL encourages consumers to spend more than they can afford, contributing to potential debt accumulation. In response, regulatory efforts are gaining traction, particularly in the U.K., where the Labour government is preparing to introduce stricter regulations for the BNPL sector. City Minister Tulip Siddiq confirmed in July that new regulatory frameworks would be outlined soon, following several delays under the previous Conservative administration.
Despite regulatory challenges, Klarna continues to innovate. In August 2024, the company launched a checking account-like service called Klarna Balance, offering cashback rewards to incentivize consumers to use its platform for broader financial activities beyond installment payments.
What’s Next for Klarna?
As Klarna strengthens its position in the BNPL space, the company is also gearing up for a highly anticipated initial public offering (IPO). CEO Sebastian Siemiatkowski has hinted at the possibility of a 2024 IPO but has yet to confirm a timeline. Industry insiders are watching closely, as Klarna’s IPO could be one of the most significant in the fintech space.
For Klarna, the partnership with Adyen marks a crucial step forward in transforming how consumers pay in physical stores. It signals a growing convergence between online and offline payment systems and highlights the potential for fintech companies to influence consumer behavior in the traditional retail environment.
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Swedish fintech Klarna partners with Dutch firm Adyen to bring buy now, pay later services to physical stores worldwide, expanding beyond online shopping into the brick-and-mortar retail market.
