Klarna, is a financial startup that was founded in Stockholm in 2005 whose maxim is “buy now, pay later”, it is revolutionizing the Internet shopping market. Its great attraction is that it offers users the possibility of buying without interest and in installments.
It is currently worth 45.6 billion dollars and is already the European startup with the highest valuation, above names like Spotify or Stripe. It has tripled in value in less than six months. And it is going to create a hub in Madrid where it plans to hire more than 500 engineers.
Credit card competition
Positioned as a clear competition to traditional credit cards, it defends that it wants to facilitate online purchases, making payments simple and secure.
Users can navigate in this application and buy at any participating establishment with Klarna’s payment options. That is, they can pay immediately or pay later. Users can also manage expenses and available balances, add favorite items to their collections, initiate refunds, access personalized discounts, receive prices, send notifications, or track deliveries.
Klarna CEO Sebastian Siemiatkowski says “traditional banks and card companies have been overcharging customers for an incredibly poor customer experience for far too long,” so his company’s goal is to simplify this. process and improve the shopping experience.
How does it work
Klarna has more than 90 million users and 250,000 stores in 17 countries, especially in Europe. But its investors hope that with the last rounds of financing the company will be able to become strong in the United States.
To function, Klarna makes deals with retailers. Among the more than 250,000 clients around the world that it has, we can locate names such as Ikea or Nike.
The Swedish company allows users to pay after purchasing through its app. Through it, consumers can decide when to make payments, as well as manage expenses and view available balances. They can also initiate refunds, track deliveries, and receive price drop notifications.
By making payments through the app, users do not have to register each time on a different e-commerce site each time they want to make a purchase.
Pay in installments without interest
Part of the appeal of Klarna is that it offers payment plans that allow buyers to divide their purchase into several equal installments (three in Spain) that will be paid each month.
The buyer, yes, pays two previous installments: at the end of the purchase and when the order is sent. The amount that remains to be paid is divided into three monthly payments without interest being charged.
The company notifies the user in advance so that a balance is available on the card. If the payment is not successful, there is a risk of penalty. If the product is canceled or returned, the pending fees are canceled and the money advanced is returned.
Other payment options
In addition to this system, Klarna has other payment plans, such as Pay in 30. Instead of paying at checkout, buyers have 30 days after the item is shipped to pay for their purchase.
Klarna also offers a Pay Now option through the app. Additionally, the company also offers a traditional loan option available at select locations. Loan terms range from six to 36 months with annual percentage rates from 0% to 29.99%. The APR for standard purchases is 19.99%.
It should be noted that it is Klarna who bears the financial cost, since it pays the establishment for the operation carried out while waiting for the consumer to pay it. How do you get money? Charging stores a transaction fee.
A hub in Spain
Klarna arrived in Spain in the middle of last year and did so by launching a system of “Pay in three installments”. Since then, he assures that he already works with 160 companies.
In addition, in May of this year it announced the creation of a technology hub in Madrid in which it plans to hire 500 professionals.
More specifically, the company plans to hire product development positions, including engineers, product managers, designers, and analytics and data science experts.
International expantion
Although so far much of its business has been in Europe, Klarna has started a process of international expansion. So far this year alone it has entered six new countries (such as New Zealand and France) and plans to expand into several more markets before the end of this year.
In an interview with TechCrunch, the CEO of the company, Sebastian Siemiatkowski, assures that another avenue of growth for this year, and for which they will dedicate a good part of the money obtained in this round of financing, is through the purchase of other companies .
A round of 639 million
The company recently received $ 639 million, allowing it to reach a valuation of $ 45.6 billion.
To give us an idea, Coinbase went public with a valuation of 100,000 million, the same in which Stripe (another European startup) is evaluated. Meanwhile, Zoom went public with a valuation of 16,000 million and Xiaomi reached the figure of 45,000 million of valuation in 2014.
With this round, the start-up’s valuation has grown by almost 50% to $ 45.6 billion. It was in March that Klarna, by raising a billion in financing, achieved a 330% increase over its valuation.
