An investment of $460 million in Swedish e-commerce payments innovator Klarna takes the company’s valuation to $5.5 billion, and makes it the largest private fintech firm in Europe. The funding will help fuel Klarna’s international growth, especially in the United States, where it has been gaining new customers at a rate of six million a year.
Dragoneer Investment Group led the round. Commonwealth Bank of Australia, HMI Capital LLC, Merian Chrysalis Investment Company Limited, Första AP-Fonden (AP1), IPGL, IVP, and funds and accounts managed by BlackRock also participated. Combined with the financing from a round this spring, the investment gives Klarna more than $1.2 billion in total capital.
Klarna’s Shop Now Pay Later approach to e-commerce enables consumers to pay for purchases at leading, brick and mortar retailers as well as with online merchants, with a variety of interest-free, no-fee financing offerings. These include a four installment payment option that charged every other week to the customer’s credit or debit card, and 30-day payment period that begins once the item is shipped or received.
Klarna has more than 60 million shoppers using its offerings, and 130,000 retailer partners around the world. Richard Watts of Merian Chrysalis Investment Company credited Klarna with providing its merchant partners with “considerable improvement in customer engagement and sales.” In fact, Klarna reports that merchants that are offering its four installment payment plan have experienced a 68% increase in average order value, a 44% increase in conversion v.s. cards, and a 21% higher purchase frequency.
“Klarna is one of Europe’s great fintech success stories and the company continues to develop truly innovative payment solutions,” Watts said.
The funding news for Klarna arrives amid a flurry of new service offerings, such as making its Shop Now Pay Later option available in-store, as well. It has also been a big year for products, from the launch of its global customer authentication platform to unveiling of its open banking platform. 2019 has also been a busy year in terms of partnerships: Klarna joined global fashion retailer ASOS in an expansion to the U.S., teamed up with U.K. fashion brand Superdry, and partnered with Canadian e-commerce and in-store point-of-sale financing company PayBright.
Founded in 2005 and headquartered in Stockholm, Sweden, Klarna demonstrated its platform at FinovateSpring 2012.
E-commerce payments innovator Klarnaannounced today that its pay later options are now available in-store as well as online.
“Shoppers today want more control over their buying experience,” Klarna U.K. General Manager Luke Griffiths said. “Our mission is to make payments as seamless and stress-free as possible. We’re now bringing more payment flexibility to the in-store environment, so shoppers can move smoothly through the purchase journey, whether they choose to shop online or on the high street.”
The announcement means that Klarna’s alternative payment options will now be available for transactions in retail, brick and mortar stores. The company has three offerings to simplify the transaction experience:
the option to pay later, up to 30 days after delivery
three equal installment payments collected monthly
a six to 36-month consumer financing offering for more expensive items
Consumers can use Klarna via their connected smartphone. First they make their purchase using their smartphone to scan either a QR code at the checkout register or after receiving and clicking on a payment link sent to the customer by email or SMS. Second, the customer adds their information and chooses a Klarna payment option.
The financing decision occurs in real-time, and average completion times run about one minute – ensuring that the in-person shopping experience is as seamless as possible. For the merchant, this means faster checkouts, happier customers, and increased conversions and sales.
Klarna’s news comes just weeks after the company announced it was extending its partnership with Swedish fashion house Acne Studios. “We’ve been impressed with Klarna’s work in Europe – particularly in our home country of Sweden,” Acne Studios CEO Mattias Magnusson said. “(We) are pleased to partner with them in other markets to accelerate our international sales.”
Also in April, Klarna launched its Mindful Money financial management content hub to help Gen Z and Millennials learn more about budgeting and spending. Mindful Money will feature insights and recommendations from personal finance commentators and journalists.
Klarna also launched its global customer authentication platform last month, providing global businesses with an easy and secure authentication process. In March, the company unveiled its open banking platform, enabling access to more than 4,300 European banks via a single access to account API.
Headquartered in Stockholm, Sweden, Klarna demonstrated its flagship solution at FinovateEurope 2012. The company has raised more than $774 million in funding, and includes Sequoia Capital, General Atlantic, and Creandum among its investors. Klarna was founded in 2005.