Klarna, nearing IPO, wins fintech partnership from Affirm

Swedish fintech company Klarna has secured an exclusive partnership with retail giant Walmart to provide buy now, pay later loans, edging out its competitor Affirm. This deal marks a significant win for Klarna as it prepares to go public in the U.S.

Under the partnership, Klarna will offer loans to Walmart customers both in-store and online through Walmart’s fintech subsidiary, OnePay. The loans will range from three months to 36 months in length, with annual interest rates varying from 10% to 36%. The new product is set to launch in the coming weeks and will be available across all Walmart channels by the holiday season.

The rivalry between Affirm and Klarna, two major players in the buy now, pay later space, is intensifying with this partnership. While Affirm is more U.S.-focused and has been a publicly traded company since 2021, Klarna boasts a more global presence.

Following the announcement of the partnership, Affirm’s shares dropped by 4.2%, indicating the impact of losing the Walmart deal to Klarna. Affirm’s stock has been volatile since its IPO in 2021, with a decline of 18% this year prior to the recent news.

Klarna’s CEO, Sebastian Siemiatkowski, expressed excitement about the partnership, calling it a “game changer” for the company. He highlighted the opportunity to provide millions of Walmart customers with a smarter shopping experience through OnePay’s installment loans powered by Klarna.

In addition to the partnership, Klarna disclosed a commercial agreement with OnePay, allowing the latter to acquire warrants to purchase over 15 million shares of Klarna at an average price of $34 each.

For Walmart’s OnePay, the collaboration with Klarna signifies a strategic move to leverage a seasoned provider’s expertise in the buy now, pay later space. With a pre-money valuation of $2.5 billion, OnePay has rapidly grown its customer base and revenue since its launch.

The partnership with Klarna is expected to accelerate OnePay’s expansion into consumer lending and enhance its suite of financial products for underserved customers. As more consumers seek alternative financing options, the installment loan offering will serve as a gateway to additional banking, savings, and payment features within the OnePay app.

Looking ahead, OnePay is exploring the possibility of introducing a branded credit card in collaboration with a new banking partner. This move aligns with Walmart’s strategy to offer both installment and revolving credit options to its customers.

In conclusion, the exclusive partnership between Klarna and Walmart represents a significant milestone for both companies, reshaping the landscape of the buy now, pay later market. As Klarna prepares for its highly anticipated IPO, the collaboration with Walmart’s OnePay sets the stage for future growth and innovation in the fintech industry.