Klarna launched in 2005, with the aim of creating trust online between consumers and merchants, something we think the banks have failed to do. Fast forward 16 years, we have revolutionized the world of retail banking as a leading payments provider and shopping service. We’re trusted by the world’s most loved brands and consumers alike.
Our core mission.
For us, everything was about putting the consumer at the heart of all that we do. For too long, consumers have been ripped off by sky high APRs of up to 60% when accessing traditional forms of credit. We created an alternative that comes with no interest so consumers who pay on time only pay the original cost of the purchase. We think this is fairer and more sustainable. But we haven’t stopped there. We want to give consumers choice. So we also offer immediate ‘Pay Now’ payments, which is 40% of our business globally. We’re continually adding tons of features and services to help consumers at every stage of the shopping journey – from visual itemized billing, delivery and returns info in one place, and a budget tracker to help consumers stay in control of their spending. We’re proud to have built a product that 18 million people in the UK love.
That said, in the UK credit cards still account for 27% of e-commerce transactions whereas BNPL is only 6%. But what we’re seeing in the UK is consumer sentiment shifting, as consumers look for better value alternatives to credit cards. Merchants who offer BNPL are meeting market needs as consumers expect to see this option at the checkout. This mirrors what we’ve seen in our more mature markets like Sweden, where BNPL has overtaken credit cards as the preferred method of payment for e-commerce transactions at 25% vs 17%.
And our model works. Our losses, in terms of the amounts consumers are unable to repay, are 30-40% lower than credit card companies at less than 1%, and in the UK it’s never been lower at 0.4% with 40% choosing to pay us back early. But what some people don’t know is that we are much more than Buy Now Pay Later.
BNPL is just one feature of Klarna.
With a far superior product that genuinely helps people save time and money, we have invested significantly in working with 25,000 merchants in the UK to offer our services to their consumers.
We’ve expanded the ways merchants can use Klarna to connect with consumers through the entire sales funnel from consumer acquisition to shopping to the post-purchase experience. This includes instantly shoppable content, live and virtual shopping, in-app sponsored placements, running search and dynamic ad campaigns and tailored content creation partnerships. With over 150 million customers globally, we understand what customers want and need from a shopping service and we’re delivering it.
Why merchants partner with us.
Over 450,000 merchants choose to partner with us, because ultimately we’re a growth engine for their businesses – large or small. The platforms and tools we’re building allow merchants and consumers to interact with each other in ways that have never been possible before. We give customers a futuristic shopping experience that helps them at every step, reducing friction – making it smooth to purchase whilst giving them a sense of security. All the while offering our merchants new ways to interact with their customers and drive loyalty.
This is a real evolution in the way merchants have always had to work through intermediaries in order to attract customers. Positioning your stall on the town square was one sure fire way of gaining passing trade. Then came the high street, department stores and retail parks. At each step, merchants were able to gain from intermediaries making things easier for their customers. This is what we’re seeing now with online retail. The difference is, the winner-takes-all dynamic of e-commerce has led to merchants being highly dependent on a small number of very large platforms – think Google or Amazon. These are great for driving traffic but not good for merchants to differentiate themselves – it’s all too easy for a brand to become products on these platforms, rather than have a direct relationship with their customers.
But Klarna is building an alternative, which combines the traffic aggregation of those larger platforms with the individual shopping experience of each retailer. We can help merchants attract and retain customers. 150 million people use Klarna globally and we process 2 million transactions a day which makes Klarna one of the richest data payment networks in the world because of the level of data we provide on each transaction. Consumers love this because they can see exactly what they’ve bought which is visually displayed in the app, and we’ve used this data to build a first-party open data network which puts merchants in control of their brand. Merchants can utilize our platform tools and data to help deliver a richer, more personalized experience back to both existing and new customers. For example, our virtual shopping tool allows customers to engage and build a relationship directly with in-store staff driving footfall in physical stores. Klarna app users can also click to instantly shoppable content, take part in live and virtual shopping, and engage with the brands they love on a deeper level. We can see that this is driving customer loyalty and satisfaction.
The acquisitions of PriceRunner, Stocard, Apprl, Hero, and toplooks means we’re able to help consumers make informed decisions about purchasing the products they want from the retailers they love and at the best price. This in turn helps us to turbo-charge our merchants’ businesses, generating 600m* annual leads for them. And we’re not stopping there. We are developing more and more tools, like social content creation capabilities and influencer tools to help merchants attract traffic which drives brand loyalty, and sales. It’s proving popular; our marketing services revenue is up 200% YoY, illustrating how much value we drive for merchants.
*Based on H1 2022 data