December 25, 2024

The Swedish “buy now, pay later” pioneer said on Tuesday that its new design will help users find the products they want by using more advanced artificial intelligence recommendation algorithms, and merchants will be able to target customers more effectively.

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Klarna announced on Wednesday that it Uber Provides payment support for the ride-hailing giant’s Uber and Uber Eats apps.

The partnership will make the Swedish fintech a payment option in the United States, Germany and Sweden, Klarna said in a statement.

In the U.S., Germany and Sweden, Klarna will launch a Pay Now option that allows customers to pay for their orders instantly with one click in the Uber and Uber Eats apps. Users will be able to track all their Uber purchases within the Klarna app.

The company will also offer additional payment options to Uber users in Sweden and Germany, allowing users to bundle purchases into one interest-free payment and have it deducted from their monthly salary.

Interestingly, the company has not launched an installment “buy now, pay later” plan on the Uber platform, which is arguably the most popular service product on the Uber platform, but only immediate payment and monthly payment.

Klarna CEO and co-founder Sebastian Siemiatkowski said in a statement on Wednesday that the deal was an “important milestone” for the company.

Chief executive Sebastian Siemiatkowski says Klarna's new credit card is a 'healthier choice' than other credit cards

“Consumers can now pay in full quickly and securely, which already accounts for more than a third of Klarna’s global transaction volume, and more easily manage their finances in one place,” Siemiatkowski said.

Klarna declined to disclose the financial terms of its deal with Uber.

Big win for merchants ahead of IPO

The Uber deal marks one of Klarna’s most significant recent business wins and comes amid rumors the European fintech giant is preparing for a massive initial public offering that could value the company at more than $20 billion.

Klarna has begun detailed discussions with investment banks about an initial public offering, possibly as early as the third quarter, according to a Bloomberg report in February, citing unnamed people familiar with the matter.

CNBC could not independently verify the accuracy of this report. Klarna said it would not comment on market speculation.

Such a listing would mark something of a shift for a company that saw $38.9 billion wiped off its valuation in 2022, when worsening macroeconomic conditions triggered by Russia’s invasion of Ukraine led to a revaluation of sky-high tech valuations. Set.

Klarna raised an eye-popping $45.6 billion in a 2021 funding round led by SoftBank, before its market value fell to $6.7 billion in a so-called “downside round” the following year.

Buy now, pay later craze

Klarna is one of many “buy now, pay later” services that allow users to pay in monthly installments.

As an alternative to credit cards that charge interest and high fees, this payment method is increasingly popular with consumers for both online and in-person purchases.

However, it has also raised concerns about the affordability of such services, and whether it is actually encouraging some consumers – especially young people – to spend more than they can afford.

In the UK, the government has proposed a draft law to regulate the “buy now, pay later” industry.

The Consumer Financial Protection Bureau has previously said it plans to regulate buy now, pay later lenders on the same terms as credit card companies.

At the same time, the European Union passed a revised version of the Consumer Credit Directive last year, bringing “buy now, pay later” services into the scope of the rules.

For its part, Klarna has defended the buy now, pay later model as offering customers a cheaper way to get credit than traditional credit cards and consumer loans.

The company also said it welcomed regulation of “buy now, pay later” products.

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