The news: The Sweden-based buy now, pay later (BNPL) giant bolstered its global presence with new partnerships amid its aggressive growth push.
The bigger picture: Klarna’s aggressive expansion is fueled by gangbuster funding rounds.
Klarna bagged $693 million to bolster its US footprint in June, on top of a $1 billion raise in March. It used those funds to acquire three companies in July alone. All that activity is paying off: Klarna is expected to hold 48.6% of US BNPL market share by the end of this year, according to our forecasts. And in Q1 2021, Klarna reported global merchandise volume (GMV) of $18.9 billion, up from $9.9 billion in Q1 2020. $6.9 billion came in March 2021—a monthly record for the company.
The challenge: Competition threatens the growth of BNPL providers as legacy payment players try to reclaim customers.
Citi will launch a BNPL product in Australia in October, and Visa plans to launch its own product in the US in “the coming weeks and months.” Canada’s Scotiabank just debuted a BNPL installment offering that lets credit cardholders convert payments into BNPL plans.
These offerings could chip away at Klarna’s growth and make it harder for the provider to keep its impressive market share. But Klarna is likely banking on its ambitions of becoming a super app that’s home to shopping and financial services to keep its user base and fend off competitors by tying customers tightly to the company.