Popular Swedish payments company Klarna has reached the position of largest private fintech firm in Europe after recent investor funding increased its value to €4.9 billion ($5.5 billion), The Guardian reports.
While the widely used payment app has not yet become popular in Malta, it now reportedly has 60 million users worldwide. It counts famous rapper Snoop Dogg as one of its shareholders.
Klarna fits the classic ‘disruptor’ description within the payment sector and has been sold as an alternative to credit cards, even allowing users to shop instantly and pay later. Customers have the option to either pay later in a lump sum or in instalments. Interest is not charged on most items however fees start to rack up in the event of missed deadline payments.
The company raised €411 million ($460 million) through investors, primarily led by Silivon Valley-based Dragoneer, alongside the well-known investment fund BlackRock and the Commonwealth Bank of Australia.
This boosted Klarna to become the largest private fintech form in Europe and the sixth largest in the world, The Guardian reports.
PayPal, credit and debit options are all offered alongside Klarna when customers reach the online checkout at more than 130,000 retailers – including Asos and Topshop.
Since its launch in 2005, the payment app grew in popularity among millennials and younger generations who don’t quite have the funds to keep up with the latest trends in shopping, want to shop before payday while also avoiding traditional lines of credit.
It reportedly processes some 1 million transactions per day online and in store, with the company making its money by charging fees to merchants as well as customers who fail to pay on time.
Klarna is headquartered in Stockholm and secured a banking licence in Europe back in 2017. The company says that its business model encourages sales to retail partners by allowing flexible payments.
It stated that notable retailers already on board include H&M, Ikea, Nike, AliExpress, Sephora and Zara. A further 1,000 retailers are reportedly in process of coming on board.