Stripe and Klarna, the two most highly-valued fintechs in the world, have decided to join forces to establish themselves in the fractional payments market. Merchants using Stripe's services will now be able to offer their customers payment solutions in instalments. We take a closer look at this strategic partnership.
The combination of two of the world's best-valued fintechs
Fractional payment, also known as "Buy now, pay later" (BNPL), is winning over more and more retailers and consumers. For retailers, it's another way of convincing their customers to buy. What's more, customers generally take advantage of these payment facilities to increase their average shopping basket.
Against this backdrop, two major fintech players, Stripe and Klarna, have decided to join forces to strengthen their market position. At $95 billion and $46.5 billion respectively, these two fintechs are the most highly valued in the world.
Stripe, a US company founded in 2011, specializes in providing online payment solutions, while Klarna, a Swedish fintech founded in 2005, is a key player in fractional payments.
Thanks to this strategic partnership, Stripe and Klarna will be able to offer merchants using Stripe's services, based in the USA and 19 European countries, the opportunity to set up payment in inst alments for their customers.
A determination to dominate the fractional payment market
By teaming up with Stripe, Klarna now has the opportunity to reach a much larger number of customers.
" With Stripe, we will be a true growth partner for our retailers of all sizes, enabling them to maximize their entrepreneurial success through our joint services,"said Koen Köppen, CTO at the Swedish fintech.
" Klarna's payment options are a powerful tool for online businesses to attract more customers, increase conversion rates, increase basket size and thus increase revenue," enthused Will Gaybrick, Product Manager at Stripe, in a recent press release.
For Stripe, the stakes are many. Firstly, the American fintech hopes to offer its payment solutions to large merchants, particularly in the luxury and fashion sectors, where fintech Klarna has a strong presence. Unlike its Dutch competitor Adyen, which has established a foothold with major sellers, Stripe's profitability is based more on the volume of transactions carried out.
But Stripe and Klarna's main objective is to compete with American fintech Square, which this summer bought Klarna's main rival, Afterpay, for $29 billion. Since Stripe is unlikely to buy Klarna for the time being, a partnership appeared to be the best option.
What's more, Stripe is protecting itself by not signing an exclusive partnership: the American fintech also offers Afterpay payment solutions to its customers, and could join forces with other players established in Europe.