Klarna Partners with Walmart for Exclusive BNPL Offer

In a significant partnership announced recently, Swedish fintech company Klarna has been chosen as the exclusive provider of buy now, pay later (BNPL) solutions for Walmart. This development effectively ends Walmart’s prior collaboration with American rival Affirm.

Details of the Partnership

Klarna’s integration into Walmart will allow customers to access loans through the retailer’s fintech startup, OnePay. This initiative marks a strategic move for Klarna ahead of its anticipated public listing in the U.S. This partnership provides an opportunity for Klarna to further solidify its standing in the BNPL market, offering loans ranging from three to thirty-six months, with interest rates varying between 10% and 36%

Market Dynamics

The collaboration is expected to be fully operational across all Walmart platforms by the holiday season, positioning it as the retailer’s sole BNPL option by year-end. This decision intensifies the competition between Klarna and Affirm, both of which are leading players in the BNPL ecosystem. While Affirm has established itself primarily in the U.S., Klarna has a broader international reach.

Impact on Affirm

Following the announcement of the exclusive deal, Affirm experienced a notable decline in its stock price, dropping 4.2% and falling as much as 14% earlier in the trading session. This shift is particularly concerning for Affirm as it positions itself against its rival, which prepares for a public offering while gaining significant market share.

Strategic Timing for Klarna

The deal aligns with Klarna’s plans for a well-publicized initial public offering. The firm reported a tumultuous valuation history, peaking at $46 billion in 2021 before declining sharply due to market conditions. Currently, analysts estimate its valuation at around $15 billion, approximately equal to Affirm’s market value. CEO Sebastian Siemiatkowski emphasized the importance of the OnePay deal, calling it a “game changer” and highlighting the potential for growth in serving millions of Walmart customers.

Opportunity for OnePay

OnePay, which recently rebranded from One, has set itself up as a key player in the fintech landscape, achieving a pre-money valuation of $2.5 billion within a span of two years. With over 3 million active users generating an annual revenue run rate exceeding $200 million, OnePay’s collaboration with Klarna illustrates the advantages of partnering with an established provider in the sector.

Future Implications

The partnership is expected to enhance OnePay’s ability to draw Walmart customers into its fintech ecosystem. As consumer reliance on loans grows—especially amid rising credit card debts—installment loans could be an effective entry point to offer additional banking and savings options. Walmart’s CFO, John David Rainey, indicated that the next phase could potentially involve introducing a OnePay-branded credit card in collaboration with a new banking partner.

In conclusion, the Klarna-Walmart partnership not only redefines Walmart’s buy now, pay later strategy but also marks a pivotal moment for Klarna as it gears up for a public offering. Observers will be keen to see how this strategic move influences the competitive landscape among major players in the BNPL sector.