- The likes of Afterpay and Zip Pay will soon have to deal with another major entrant in the ‘buy now, pay later’ space as the Commonwealth Bank announces it is bringing Swedish competitor Klarna to Australian shores.
- Valued at $US5.5 billion, Klarna ranks as Europe’s largest private fintech, and has investors ranging from the world’s largest asset manager BlackRock to rapper Snoop Dogg.
- It’s now looking to get a foothold in Australia and New Zealand with the help of Australia’s largest bank.
Australians will soon have yet another ‘buy now, pay later’ option brought to them by Australia’s largest bank.
The Commonwealth Bank (CBA) has revealed it has taken an almost $150 million stake in Klarna, a Swedish-based payment service and Europe’s biggest private fintech.
“We have committed an investment of US$100 million into Klarna Holding AB, as part of their US$460 million capital raise. We will become Klarna’s exclusive partner in Australia and New Zealand and intend to further invest at the parent and local level to support this partnership,” a CBA spokesperson told Business Insider Australia.
“Klarna’s footprint continues to grow, now serving over 60 million consumers, 130,000 merchants partners, 1 million transactions daily and is in sight of a $1 billion annual revenue,” Klarna said in a separate statement.
“We are therefore delighted to announce that with the participation of the Commonwealth Bank of Australia, Australia’s largest retail and commercial bank, in the equity round, we have also agreed to establish an exclusive partnership for the Australian and New Zealand markets.”
It comes after Visa announced it was also entering the market, offering cardholders the same service but without the need to download an app or setup an account.
It’s an interesting move by the Commonwealth Bank which wants to help its customers make better financial choices via its new app.
Yet on its website, it warns customers of the potential risks of such buy now, pay later services.
“Make the repayments on time and you’ll be fine. But fall behind and you could be stung with late payment fees, which could impact your credit history,” one article prudently reads.
In light of this latest partnership, however, the bank declined to comment on whether or not the app would extend this warning to customers who try to use Klarna.
The Australian corporate regulator ASIC and a parliamentary inquiry have previously raised concerns about the ‘buy now, pay later’ business model and whether it targets vulnerable consumers.
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