The Stockholm-based fintech Klarna has launched in Australia with the backing of the Commonwealth Bank of Australia, which has invested $200 million into the company, famous for its buy-now-pay-later functionality.
At the end of January, the companies announced the investment and the service’s entry into the Australian and New Zealand markets, first through the bank’s own app and eventually as a standalone system available to non-CBA customers, though the two will operate a joint ownership structure.
Entry to the Australian market means Klarna will enter direct competition with the home-grown rival Afterpay, which is much younger but similarly powerful across Klarna’s key growth markets in the US, UK.
On the first day of launch in Australia, however, Klarna’s app topped the app charts. While the main draw is the pay later or payment in instalments features popular among a millennial generation either averse to or unable to obtain traditional sources of credit, it is also a regular pay-now platform.
It's offer to shoppers is a flexibility hard to come by with traditional means, or in the words of one retailer: “sit back and relax. Klarna will notify you when payment is due.”
On its website, Klarna’s offer to retailers is that with a flexible range of options it will grant access either to a complete online checkout, a quick-pay button for social shopping, or a cheap way to offer financing in-store. Their promise is increased (44%) conversion rates and higher average order value (68%) for a more transparent and less elastic fee than traditional merchant rates.
As of August, as many as $29 billion of transactions were being processed by the company worldwide.
Sourced from Finextra, Martech Series, Klarna, Guardian, FT