LONDON: Visa Inc is buying a stake in Swedish payments technology firm Klarna AB and forming a strategic partnership, as both companies aim to expand outside their core markets.
Terms of the deal were not disclosed but Klarna plans to issue new equity as part of the transaction, the Swedish company’s chief commercial officer Michael Rouse said in an interview.
The investment will allow Visa to reach more mobile commerce merchants, particularly in the Nordic region and Germany, said Jim McCarthy, Visa’s executive vice-president for innovation and strategic partnerships. But both McCarthy and Rouse said it was too soon to say exactly what new products or payment options Visa and Klarna might develop.“In the mobile-first world, we need to partner with technology companies,” McCarthy said. “And we see these partnerships as core to our growth.”
Rouse said the Visa partnership might bolster Klarna’s position in markets where credit cards are more popular than invoice financing. These markets would include the Netherlands, the UK and, most importantly, the US, where Klarna has been trying to make inroads since September 2015. The company signed up Overstock.com Inc, Shoes.com Inc and Shopify Inc as anchor customers in the US, but recently revamped its sales force and corporate structure there in order to win over more merchants.
Like PayPal, Klarna has historically positioned itself as an alternative to credit cards like Visa. “We have been somewhat enemies in the past in terms of competing and the way we went to market,” Rouse said of Visa.
However, Klarna announced it had received its full banking licence in Sweden in June, paving the way for the Swedish firm to issue loans and, potentially, credit cards. Klarna has been best known for providing instant, short-term consumer credit, allowing customers to defer paying for goods purchased online until they are delivered. —Bloomberg