Fintech heavyweights Stripe and Klarna enter strategic partnership

Two of the world’s most valuable fintech companies have partnered up, with Klarna’s buy now, pay later payment options to be offered by Stripe retailers online.

Payments processor Stripe said it will give its retailers the option to offer payment through interest-free installments provided by Klarna at the checkout, deepening the latter’s hold over the booming BNPL market.

Stripe was valued at $95bn earlier this year and is used by millions of e-commerce businesses around the world, including Missguided, ASOS and Deliveroo. Sweden’s Klarna, last valued at $46bn, has come under intense scrutiny in recent months as a leader in interest-free easy-access credit, as watchdogs including the UK’s Financial Conduct Authority consider how to regulate the sector.

READ Treasury pushes for risk disclosure, tighter credit checks in buy now, pay later market

“Together with Stripe, we will be a true growth partner for our retailers of all sizes, allowing them to maximise their entrepreneurial success through our joint services,” said Koen Köppen, chief technology officer at Klarna, in a 26 October statement. “By offering convenience, flexibility, and control to even more shoppers, we create a win-win situation for both retailers and consumers alike.”

Stripe said Klarna’s services would be made available to retailers using its payments platform in select European countries, the US and the UK.

It added that the two companies are “planning to deepen and expand their partnership to more countries and products in the future”, with Klarna already using Stripe for around 90% of its payments volume in the US and Canada.

The BNPL market has swelled during the pandemic as more shoppers headed online during periods of widespread lockdown and financial difficulty. More financial firms are also eyeing up a slice of the market, including Barclays, Monzo, Revolut, PayPal and Visa.

Research by consultancy Bain & Co showed this month that around £6.4bn was spent using pay-later credit in the UK in 2020, an annual uptick of as much as 70%.

The tie-up between Klarna and Stripe comes after the Treasury laid a path for tighter regulation of the sector, recommending in a consultation that lenders are clearer with consumers about the risks of taking on debt.

READ Buy-now-pay-later firms such as Klarna face FCA regulatory clampdown

The Treasury suggested that the FCA should undertake proper supervision of how BNPL lenders communicate with consumers about the risks of their products.

This would include disclosures on the consequences of using their services, such as arrears fees or debt being transferred to a debt collection agency.

The Treasury also said lenders should carry out proper creditworthiness assessments of their customers to make sure they can afford repayments, even if this comes at the expense of friction at the checkout.

To contact the author of this story with feedback or news, email Emily Nicolle

Most Related Links :
todayuknews Governmental News Finance News

Source link

Back to top button