Klarna has reported a significant expansion in its network of UK merchants, evidencing a robust demand for buy-now pay-later (BNPL) services among British shoppers, as reported by City AM.
As of October, the Swedish fintech company boasts 41,496 merchant partners in Britain, a substantial increase from approximately 30,000 a year prior, according to figures Klarna shared with City AM.
Key partnerships established by Klarna within the last year include high-profile UK names like Argos, Airbnb, and the digital platforms of Boots.
Generating most of its revenue through merchant fees, Klarna is pursuing growth across new sectors within the UK market. Last month, it unveiled a collaboration with small business platform Xero, potentially enabling BNPL options for services such as plumbing and automobile repairs.
Moreover, Klarna is aiming to extend its reach into brick-and-mortar retail. It's working with financial technology titan Adyen to integrate Klarna as a payment method across Adyen's over 450,000 payment terminals.
The rise in BNPL providers like Klarna, Zilch, and Clearpay has been strikingly swift, especially as they offer mostly interest-free installment loans an appealing credit card alternative that's captivated millions in the UK.
On Tuesday, Klarna announced that close to 10 million UK customers had used its services over the past year across its range of products.
"Klarna's come a long way from the small rented office in Carnaby Street where we launched in the UK ten years ago," said Raji Behal, head of Western, Southern Europe, UK & Ireland at Klarna, in a statement to City AM.
We now facilitate one in every 10 British retailers. However, we're still only a small fraction of credit card spend, so we're looking forward to the next decade of continued growth.
Although Klarna is best known in Britain as the country's leading BNPL provider, it highlighted that around 30 per cent of its global transactions are for full payment.
The firm announced that the worldwide number of retailers offering Klarna has exceeded 600,000, marking an approximate 20 per cent increase from around 500,000 in August 2023.
It further revealed that an average of about 90,000 new users try Klarna each day.
BNPL remains unregulated in the UK. While large companies have voluntarily implemented safety measures such as credit checks, consumer groups have cautioned that individuals risk accumulating debt from late repayment fees spread across multiple providers.
Klarna's UK network expansion comes as it strives for more profitable growth by eliminating thousands of jobs with the assistance of artificial intelligence (AI).
Klarna hasn't posted an annual profit since 2018 when it aggressively ventured into the lucrative US market. However, the company has made strides on its bottom line this year, swinging to an adjusted profit in the first half of 2024.
In August, it was reported that Klarna was in preliminary discussions with investors to assess their interest in a secondary share sale as it prepares for a highly-anticipated stock market debut.
The potential sale of shares could enhance its valuation, which plummeted to $6.7bn in 2022 from a stratospheric $45.6bn the previous year after venture capital investors were unnerved by rising interest rates.
According to sources, Klarna has engaged with several prominent Wall Street banks to discuss a potential IPO in New York that might take place as early as the first half of the following year.
