Klarna announced a global partnership with Uber to provide payment options for Uber and Uber Eats apps in the U.S., Germany, and Sweden. Users will be able to pay instantly with the “Pay Now” option or bundle purchases into a single interest-free payment taken out of their monthly salary. While Klarna’s popular installment-based buy now, pay later plans will not be available on Uber’s platforms, this partnership is a significant milestone for Klarna, according to CEO Sebastian Siemiatkowski. The financial terms of the deal were not disclosed, but this is a big win for Klarna ahead of its anticipated IPO.
Klarna is rumored to be preparing for an IPO that could value the company at over $20 billion. After experiencing a significant drop in valuation in 2022 due to macroeconomic conditions, Klarna is now looking to bounce back with potential market flotation. The company recently launched Klarna Plus, a monthly subscription plan in the U.S. that offers perks like waived service fees, double rewards points, and curated discounts from partners like Nike and Instacart. Klarna reported its first quarterly profit in four years in the third quarter of 2023, after reducing credit losses by 56%.
As a “buy now, pay later” service, Klarna allows users to pay off purchases in monthly installments, which has gained popularity as an alternative to credit cards with high fees. However, concerns have been raised about the affordability of such services and whether they are encouraging overspending among consumers, particularly young people. Countries like the U.K., U.S., and the European Union are considering regulations to ensure responsible lending practices within the buy now, pay later industry. Klarna defends its model, stating that it offers a cheaper way for customers to access credit compared to traditional credit cards and consumer loans, and it supports regulation of buy now, pay later products.
The partnership with Uber is a significant move for Klarna, as it expands its reach and offers additional payment options to users of the ride-hailing and food delivery apps. By providing immediate payment options and interest-free monthly payment plans, Klarna aims to make financial management easier for customers while also enhancing its own offerings. This partnership comes at a pivotal time for Klarna as it prepares for a potential IPO to regain value lost in previous years. The company’s focus on innovation and growth in the buy now, pay later space positions it as a key player in the evolving financial technology sector.
