David M. Benett/Getty Images for Klarna
- Macy’s joins Silver Lake, Ant Group, and Snoop Dogg as current investors in Klarna.
- As part of the new five-year partnership, Macy’s customers will now be able to pay for online shopping in four interest-free installments with Klarna.
- Klarna now has around 9 million users in the US, after its total number of customers in the country rose more than six times in the first half of 2020.
- Macy’s did not disclose the size of its investment.
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Macy’s has invested in Swedish fintech giant Klarna as part of a five-year partnership, the companies announced in a statement on Tuesday.
Klarna is valued at $10.6 billion, making it the highest-valued private fintech company in Europe, it announced after receiving a new $650 million funding round on September 15. Klarna is considering a US stock market listing by 2022, according to The Financial Times.
Macy’s joins other Klarna investors including Snoop Dogg, H&M, BlackRock, Silver Lake, and Jack Ma’s Ant Group. Macy’s did not disclose the size of its investment.
The partnership with Klarna allows the department store chain’s customers to begin paying for items in four interest-free installments at Macy’s online checkout.
Klarna works by allowing users to make purchases online at stores through its third-party mobile app. Klarna pays the merchant, and customers then repay Klarna in interest-free installments. The company makes money by charging fees to partner merchants and to customers for late payments.
Klarna's app has boomed during lockdown. In the first half of 2020, it partnered with more than 35,000 retailers, and now works with more than 200,000 brands globally.
Its sales are up significantly, too. Klarna processed transactions totalling $22 million in the first half of 2020, it said, which is 44% higher than the same period in 2019. Klarna currently processes around 1 million transactions a day.
The company has more than doubled the number of US retailers it works with from June 2019 to June 2020, and as of late August works with 4,300 US stores and brands. These include Sephora, Vans, The North Face, and ModCloth.
And the new partnerships are paying off, according to a recent statement released by the company. It now has around 9 million users in the US, after the number of customers rose more than six times in the year through the end of June.
"We have a number of other major merchants going live shortly, so we need to continue on this path now," Klarna CEO Sebastian Siemiatkowski told The Financial Times. "We do see a very tangible shift in the US market. We honestly had spent a long time talking to some of these retailers and they were good conversations but often slow, now suddenly they are very focused and decisions are being made."
This rapid international expansion, however, has also come at a cost. In August, Klarna recorded a profit loss of $60.6 million in the first half of 2020 — seven times higher than in the first half of 2019. Klarna cites this to launching in new markets.