Klarna has partnered with Uber to provide payment services for both Uber and Uber Eats apps in the U.S., Germany, and Sweden. The partnership will offer Klarna’s “Pay Now” option, allowing customers to pay off their orders instantly in one click. Users will also be able to track their Uber purchases through the Klarna app. Additionally, an interest-free payment option will be available in Sweden and Germany, allowing users to bundle purchases into a single monthly payment. While Klarna’s installment-based buy now, pay later plans will not be available on Uber platforms, the company sees this partnership as a significant milestone.
The deal with Uber is a major win for Klarna as it prepares for a potential IPO that could value the firm at over $20 billion. Klarna has recently been in talks with investment banks for an IPO as early as the third quarter. This move comes after a significant drop in valuation in 2022 due to economic conditions influenced by the conflict in Ukraine. Klarna experienced a down round, seeing its valuation fall from $45.6 billion to $6.7 billion. The company launched Klarna Plus, a monthly subscription plan, to attract and retain users ahead of the IPO. Klarna reported its first quarterly profit in four years in 2023, attributing this success to reduced credit losses.
Klarna is known for its “buy now, pay later” services, allowing users to pay for purchases in monthly installments. This payment option has gained popularity as an alternative to traditional credit cards, but concerns have been raised about the impact on consumer spending habits, especially among younger demographics. Governments and regulatory bodies in various countries, including the U.K., the U.S., and the European Union, are considering regulations to oversee buy now, pay later services in order to ensure consumer protection. Klarna has defended its model, highlighting the affordability and accessibility it offers compared to credit cards and consumer loans. The company supports regulation of buy now, pay later products.
The partnership with Uber represents a significant opportunity for Klarna to expand its reach and offer its services to a wider customer base. As Klarna gears up for a potential IPO, securing partnerships with major companies like Uber is crucial for its growth and success in the financial technology industry. Klarna’s focus on innovation, profitability, and consumer protection will be key factors in its continued success as it navigates a rapidly evolving financial landscape. The future of buy now, pay later services will likely be shaped by regulations and industry trends, but Klarna’s commitment to offering affordable and accessible payment options will be a driving force in its long-term sustainability.
