Klarna sells its Klarna Checkout business

Klarna announces the sale of its cash activities. Indeed, the fintech cited its desire to concentrate on developing its fractional payment activities as the reason for selling KCO. However, the divergence of interests between its partnerships and its checkout business seems to be a strong argument in the reasons for the sale.

FACTS

• Klarna has announced the sale of its Klarna Checkout (KCO) business, launched in 2012, to a consortium of investors led by founder and partner BLQ Invest.
• KCO represents a significant part of Klarna's activities in Northern Europe. The division has a market share of almost 40% in Sweden. And over 20% in the Nordic countries.
• As for the sale price, an agreement has been reached for SEK 5.4 billion ($520 million).
• Klarna explains that it wishes to concentrate on its offer of flexible payment methods, which it addresses worldwide. The sale of KCO will enable Klarna to focus on developing this part of its business.
• The takeover of KCO will take effect on October 1, but the two companies will continue to work together for some time to ensure a successful transition.

CHALLENGES

• A carefully chosen buyer: Klarna spent over a year studying proposals. It chose this consortium because BLQ Invest has a reputation for focusing on the growth and development of innovative Swedish companies, following a “Buy and Build” strategy.
• A problematic dual positioning: The desire to deploy other activities is not the only reason for the sale of KCO. There is also a conflict of interest related to partnerships with PSPs such as Stripe and Adyen. In this situation, Klarna needs to work effectively with its partners to ensure that its solutions are promoted, and at the same time develop its checkout offering to be able to deal directly with merchants. Klarna has therefore made a choice, which partly explains the sale of KCO.

MARKET PERSPECTIVE

• Partnerships with PSPs represent a major source of growth for BNPL players and other payment alternatives. They enable them to reach a large number of merchants and integrate their platforms more easily.
• With regard to developments in the BNPL market, Stripe recently unveiled a series of new features for the French market, including the integration of Alma as a new solution for French merchants.