The Swedish fintech company lost US$93 million last year, compared to an US$11-million profit in 2018. It had been profitable since its founding in 2005. The firm earns fees from merchants and charges customers interest for late payments. (Financial Times)
Talking point: Klarna’s model allows consumers to pay for their e-commerce purchases in installments or over as many as 30 days; it only collects fees if they don’t settle up by that deadline. But people in the firm’s home base of Northern Europe shop online differently than other parts of the world, or even the continent. For example, bank transfers or direct debit are significantly more popular in markets like the Netherlands, Germany and the Scandinavian region than they are in the United Kingdom, while almost half of U.S. e-commerce purchases are done using a credit or debit card. Klarna attributed its credit losses, which more than doubled to US$191 million, to first-time users in new markets paying back less reliably. As the firm expands outside of Europe—it’s also recently added Australia and New Zealand—a Canadian e-commerce giant is using it to go the other way. In October 2018, Klarna and Shopify announced the Swedish firm’s pay-later feature would be integrated into Shopify Payments in Germany; U.S. company Stripe processes transactions in most countries.