Klarna has secured a global payments deal with Stripe ahead of its successful IPO

Klarna has agreed a major new distribution partnership with fintech unicorn Stripe, aiming to expand its reach and add more merchants to its upcoming list in the US.

Klarna’s buy-now, pay-later (BNPL) service will be available as a payment option for merchants using Stripe’s payment tools in 26 countries, the two companies told CNBC on Tuesday.

This is not the first time that Klarna and Stripe have met. In 2021, at the peak The fintech frenzy fueled by the Covid-19 pandemicStripe announced that Klarna would offer its BNPL plans to the company’s US merchants.

BNPL plans are installment loans that allow consumers to buy something online or in store and then pay off the debt later or in equal monthly installments. BNPL arrangements have become a popular way for people to spread the cost of their daily purchases.

The new tie-up with Stripe gives Klarna a big boost as it prepares for its initial public offering. Klarna filed for an IPO in the US in November. The company can achieve a valuation of $20 billion, a Bloomberg News last year’s report

Klarna makes money from the fees merchants pay on each transaction processed through its platform. In exchange for providing Klarna visibility in payment instruments, Stripe will receive a portion of the money Klarna earns from a given transaction.

Klarna declined to disclose the financial terms of its deal with Stripe.

“This is really significant for Klarna,” Klarna Chief Commercial Officer David Sykes told CNBC, adding that the company has already doubled the number of new merchants in the three months since it began implementing the new integration with Stripe in October.

“We added 100,000 new merchants in 2024 and we’re already seeing that growth rate increase with this deal.” he added.

Recently, analysts have valued Klarna, which was founded in 2005, in the $15 billion range. During the pandemic-induced boom in fintech stocks, the company was attracted A valuation of $46 billion 2021 in a funding round led by SoftBank’s Vision Fund 2.

In 2022, Klarna took an 85% haircut in a new financing that valued the company at $6.7 billion.

The deal also has the potential to increase revenue for Stripe as well.

BNPL’s supporters tout these plans as a way to increase the overall level of transactions, as buyers can buy more items in a shorter window and then pay for them over a longer period.

In a study conducted by Stripe last year, companies that offered BNPL as a payment method generated 14% more revenue with increased conversion and higher average order values.

“We saw BNPL volume grow 172% last year on Stripe, which is much faster than other major payment methods,” Jeanne Grosser, chief business officer at Stripe, told CNBC, calling the deal with Klarna a “win-win.” he added that “for both companies.

Stripe has been speculated to be a short-term IPO candidate, but for its part, the company says it’s in no rush. The company, also a victim of declining fintech valuations, cut its rating. 50 billion dollars in 2023 from 95 billion dollars in 2021. Company assessment as reported It rebounded to $70 billion as part of a second share sale.