This buy-now-pay-later operator has conquered Europe — now its sights are set on Australia

When Sebastian Siemiatkowski entered a Dragons’ Den-style program at Stockholm School of Economics, the buy-now-pay-later (BNPL) revolution wasn’t even a glint in the eye of modern giants like Afterpay. So it’s perhaps unsurprising that the ‘dragons’ rejected Siemiatkowski’s InvoiceMe idea, which would allow consumers to pay for purchases later.

Undeterred, Siemiatkowski teamed up with Niklas Adalberth and Victor Jacobsson to launch Klarna in 2005. It was initially “a way to help consumers in Sweden pay for larger-ticketed items over time rather than upfront,” says Rhys Thomas, head of partner success at Klarna. But by 2021 it had become one of the most dominant forms of payment across Europe, the UK and the US.

So how did a simple business idea evolve into the largest fintech in Europe that is now disrupting the Australian market?

Going beyond the BNPL revolution

“Klarna is much more than buy now, pay later,” Thomas says. “We exist to elevate the shopping experience by providing smoooth, flexible payments, and we’re also a regulated European bank.”

Join the ride.

Compared to traditional BNPLs, Klarna goes beyond just payments. The shopper is the core focus. All the key ‘micro-moments’ along the shopping journey are captured — from browsing and scrolling to post-purchase. This ultimately makes the whole journey easier for both buyers and sellers.

There are also a number of unique tools that Klarna provides to ensure a streamlined shopping experience, according to Thomas.

“The Klarna app contains features such as price-drop notifications and collections to help shoppers make the right decisions. They can save items from their favourite stores, share these collections and much more.

“Klarna is moving towards becoming more of a shopping platform like Amazon, rather than just being a BNPL. On top of this, consumers never have to pay for an item that’s wrong or broken — Klarna always has their backs.”

Smarter technology means a better customer experience

What the customer sees on the face of Klarna is simple and familiar — the technology allows consumers to pay off their purchases over four interest-free instalments. But it’s what’s underneath that sets Klarna head and shoulders above the competition.

“There is a lot of complex integration work behind the scenes, but the end solution for the buyer is simple, intuitive and seamless,” Thomas says. “We’re constantly looking for new and innovative technologies to create an even safer and better experience. We have several dedicated teams in multiple regions continually working on improving our safety and making sure that we ask our customers the right questions, as well as staying on top of all financial regulations in each market.”

For business owners, Klarna provides every partner with the highest level of security. “As a retailer, you’ll always receive guaranteed payouts every time because Klarna takes all the risk,” Thomas says.

And they aren’t satisfied with what they already have. As part of their push into the Australian market, Klarna is investigating new avenues to improve the shopping experience.

“Klarna recently unveiled an expanded suite of marketing products and services designed to provide retailers with even sharper tools to drive shopper demand,” Thomas says. “Following the acquisition of Toplooks, Klarna now combines its various tools with an AI-powered Dynamic Ads function, which uses AI to take a product feed from any merchant, recognise products, categorise, classify and then create bespoke images.

“The images are dynamic and refresh every 30 minutes, allowing merchants to display in-stock inventory, update messaging, create, test, analyse, iterate, improve and amplify at scale across Klarna or other channels.”

The best part, Thomas says, is that this approach results in dramatic increases in click-through and conversion rates, while also elevating the shopping experience for consumers.

Supporting all retailers, big and small

Thomas and the wider Klarna team understand the effects COVID-19 has had on retail as well as the competitive nature of Australian business as a whole. “It’s a highly competitive landscape here in Australia, which has challenged us to become even better. Now, more than ever, we must understand our customers and partners and make sure that we can tailor the solution to their specific needs.”

So how can Klarna help businesses improve sales while streamlining their operations?

“We have 90 million active consumers, we work with over 250,000 businesses globally and we have a broad shopper base in Australia that is growing daily,” Thomas says. “This means we bring an enormously deep wealth of knowledge to growing businesses and giving consumers what they want.”

Klarna works with all business types and sizes, from giants like H&M, Sephora and IKEA right down to local mum-and-dad retail stores.

“If small Aussie businesses are thinking about expanding, then we have them covered,” Thomas says. “You only need one single integration with Klarna to set up your global account and start selling to other regions, and our merchant-support teams are always here to help you out.”

Klarna’s shopping app is also designed to encourage consumers to shop with the stores they love, which increases repeat business.

Thomas says: “Small business owners can reach an entirely new shopping community with exposure in Klarna’s channels — from EDMs and in-app articles, to Instagram and more.”