Consumers appear to be flocking to buy now, pay later options. Evidence of that comes from Klarna US, which says it gained 1 million customers in three weeks, pushing its total to 11 million. It has grown from 9 million customers only since August.
Among the reasons for the rapid growth, Klarna says, are the addition in October of retailers Etsy, GameStop, Macy’s, and Haus Laboratories, which was founded by pop star Lady Gaga. More than 5,500 U.S. retailers offer Klarna’s BNPL option out of more than 200,000 globally. Klarna is based in Stockholm.
“This accelerated adoption of our app and interest-free pay later options reflects the evolving needs of today’s consumer,” David Sykes, head of Klarna US, said in a statement. “We’ve also recently partnered with hundreds of retailers who will be well-positioned to connect with their customers in a more meaningful way now ahead of the busy holiday shopping season.”
Sykes, in an interview for an article in the forthcoming December issue of Digital Transactions magazine, says three factors are affecting BNPL growth. One is that it’s easier to budget when a larger transaction can be broken into smaller amounts. Another is that younger consumers, who may not have much experience with credit cards, like the option. The third is that retailers attracted to BNPL because its transactions often have higher average order values and better conversion rates, Sykes says.
All this is happening when e-commerce in general is growing, and being accelerated by the Covid-19 pandemic.
Klarna also announced its contactless in-store payment service is now available at 60,000 U.S. stores. Customers use the Klarna app to create a one-time virtual card they add to a digital wallet. They can then make a contactless payment using that card.
In related news, New York City-based Quadpay Inc. released Quadpay for Chrome, a browser extension for desktop PC users. Quadpay says the extension enables consumers to use Quadpay on any Web site at checkout by creating a virtual Visa card that is automatically inserted into the checkout’s credit card form. The merchant is paid upfront and the consumer pays Quadpay in four installments over six weeks.
And athletic-clothing specialist RYU Apparel Inc. adopted buy now, pay later capability from Afterpay Ltd.
In yet more news, San Francisco-based Affirm Inc. is preparing for an initial public offering. It said it filed a Form S-1 registration statement with the U.S. Securities and Exchange Commission as a step toward an IPO. If Affirm goes public, it will trade under the AFRM symbol. Affirm, started in 2012 by PayPal co-founder Max Levchin, closed a $500-million funding round in September.