Klarna Partners with Walmart for Buy Now, Pay Later Services

Visual representation of Klarna's partnership with Walmart for buy now pay later services.

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News Summary

Klarna has announced a partnership with Walmart to provide buy now, pay later (BNPL) services, replacing Affirm. This collaboration aims to enhance customer payment flexibility during the holiday shopping season, expanding OnePay’s reach alongside Walmart’s massive customer base. Klarna’s focus on transaction revenue and new offerings signals a strong position in the BNPL market as competition grows.

Klarna Announces Exciting Partnership with Walmart for Buy Now, Pay Later Services

In a noteworthy development within the financial technology landscape, Klarna has officially announced its exclusive deal with Walmart to become the sole provider of buy now, pay later (BNPL) loans. This exciting partnership is set to replace Affirm, which previously held the contract with Walmart, marking a significant shift in the retail landscape as the holiday shopping season approaches.

What This Means for Shoppers

So, what does this partnership mean for everyday shoppers? Klarna, known for its flexible payment solutions, will facilitate loans through its fintech startup OnePay, which is partly owned by Klarna and supported by Ribbit Capital. This shift means customers shopping at Walmart will soon have access to a new and improved BNPL service, allowing them to manage their payments in a more convenient way. With Walmart reaching an impressive $441.8 billion in revenue from its U.S. operations, this collaboration is certainly noteworthy for Klarna’s growth.

The Timeline for Transition

The transition to Klarna’s services is anticipated to kick off later this year, just in time for the bustling holiday season. This partnership is expected to launch across multiple Walmart channels, meaning that both in-store and online shoppers will benefit from the new BNPL product.

A Tale of Two Companies

Following this announcement, Affirms’ stock observed a decline of 8%, with shares trading at just over $46. This drop illustrates the competitive nature of the BNPL sector, where Klarna’s global ambitions seem to be paving the way for a stronger presence in the U.S. market. While Affirm primarily focuses on Americans, Klarna is on a mission to expand aggressively in the region, positioning itself as a formidable competitor.

Financial Performances in Perspective

Looking at the financial results, Klarna recently achieved a significant turnaround, reporting a net profit of $21 million in 2024 after a whopping loss of – $244 million just the year before. Meanwhile, Affirm reported $80 million in GAAP net income, providing insight into the contrasting trajectories of the two companies. While Klarna emphasizes transaction revenue derived from its robust loan services, Affirm has been leaning heavily into its partnerships and individual transaction approach.

OnePay’s Growth and Future Plans

Part of Klarna’s strategy involves leveraging OnePay’s existing customer base, which boasts over 3 million active users and an impressive annual revenue run rate exceeding $200 million. With Walmart’s extensive reach of approximately 255 million weekly customers, OnePay is set to gain access to a vast market, opening doors for expanding its fintech offerings. Furthermore, there are plans in the works for a OnePay-branded credit card to enhance customer engagement, facilitated by a new banking partner.

The Bigger Picture

Klarna’s CEO has referred to the partnership with Walmart as a potential “game changer.” The collaboration not only solidifies Klarna’s position in the competitive BNPL market but also sets the stage for an anticipated initial public offering (IPO). Despite facing challenges, Klarna is determined to bounce back from a significant valuation drop, standing at around $15 billion after peaking at $46 billion in 2021.

Conclusion: A Bright Future Ahead

As shopping trends continue to evolve and consumers seek better alternatives to credit cards, the emergence of new offerings in the BNPL space is more relevant than ever. With Klarna’s focus on transaction-driven revenue and Walmart’s enormous customer base, this partnership is poised to pave the way for a new shopping experience. As the holiday season draws near, shoppers can look forward to the possibilities that this collaboration holds for enhancing their purchasing power.