Klarna has significantly increased its UK partnerships, reflecting the growing popularity of Buy Now Pay Later (BNPL) services. The Swedish fintech company now boasts 41,496 merchant partners in the UK, up from 30,000 last year.
- High-profile UK partnerships include Argos, Airbnb, and Boots, as Klarna expands its reach, seeking to integrate its services in brick-and-mortar stores.
- The company reported nearly 10 million UK customers using its BNPL services, challenging traditional credit options.
- Despite its growth, Klarna faces challenges with the unregulated BNPL market in the UK, which has raised consumer debt concerns.
- Although unprofitable since 2018, Klarna recently reported a profitable half-year and is exploring a potential stock market float.
Klarna’s network of UK merchant partners has witnessed a substantial expansion, growing from 30,000 to 41,496 over the past year. This increase mirrors the rising demand for BNPL services among British consumers. The company’s strategy involves the addition of notable UK brands such as Argos, Airbnb, and the Boots digital platform to its partnership portfolio, thereby strengthening its market presence.
Klarna is actively exploring new sectors beyond online retail. This includes a recent collaboration with the small business platform Xero, which may extend BNPL options to local services like plumbing and auto repairs. The firm’s ambitions are further exemplified by its work with Adyen to introduce Klarna as a payment method across Adyen’s extensive network of over 450,000 payment terminals, indicating a push into physical retail environments.
In a testament to its growing consumer base, Klarna revealed that approximately 10 million UK customers utilised its BNPL services in the last year. This growth highlights the firm’s position as a leading alternative to traditional credit cards in the UK, with interest-free instalment loans proving particularly attractive to consumers.
However, the BNPL sector in the UK remains largely unregulated, prompting concerns from consumer groups regarding the potential for excessive consumer debt. Despite large BNPL providers enforcing voluntary safety measures like credit checks, the risk of accumulating unpaid debts across multiple providers remains a pressing issue.
Financial performance remains a critical focus for Klarna, which has been unprofitable since 2018. However, the company reported reaching an adjusted profit in the first half of 2024. Looking ahead, Klarna is contemplating a stock market debut, with preliminary talks underway regarding a secondary share sale. This move follows a dramatic drop in valuation from $45.6 billion in 2021 to $6.7 billion in 2022, largely due to investor apprehensions over rising interest rates.
Klarna’s strategic expansion in the UK underscores its ambition to dominate the BNPL market amidst evolving financial landscapes.
