Dive Brief:
- Klarna has teamed up with merchant web site development company Wix to bring its buy now-pay later installment payment services to Wix e-commerce sellers in the U.S., U.K., New Zealand, Germany and multiple other countries, according to a Thursday press release.
- The partnership, which began this week, allows merchants using Wix to offer customers installment payment options at checkout via Klarna, including its Pay in 4 and Pay in 3 options enabling customers to divide their purchases into multiple interest-free payments over time, according to the announcement. Wix is based in Tel Aviv, Israel.
- Klarna says its BNPL services can help merchants boost sales by offering an alternative payment method for their customers.
Dive Insight:
The collaboration between the two companies comes amid an installment payment boom in the U.S. A June report from Juniper Research estimated that consumers will spend $995 billion via installment payment services by 2026, an increase from $226 billion this year.
The rise in installment payments in the U.S. has drawn competition from other countries as well as major American tech and payments firms. Klarna, which entered the U.S. market in 2015, now faces a slew of competitors, like Australia-based Zip Co, that are vying for market share in the U.S. too. Meanwhile, San Francisco-based digital payments company Square purchased the Australian BNPL player Afterpay for $29 billion in August, and card giant Mastercard said last month that it create its own installment payments service next year.
As consumers gravitate to BNPL platforms, investors are pouring hundreds of millions of dollars into the emerging industry. Last year, installment payment companies raised $1.5 billion in funding, a 42% jump from 2019, according to research from CB Insights.
Despite BNPL services typically charging merchants higher fees than they incur on card purchases, data suggests customers buy more when they use the installment option. Wix sellers that offer buy now-pay later options logged a 25% increase in high-value purchases, Wix Head of Billing and Payments Omer Shatzky said in the release.
“As a result of this partnership, merchants using Wix will now be able to unlock Klarna’s global network of 90 million shoppers,” Klarna Chief Commercial Officer Luke Griffiths said in the statement. “As importantly, they’ll now have the ability to offer their customers more flexible payment options and tap into the growth of buy now, pay later solutions.”
To better compete with the growing list of rivals, Klarna is driving its newfound venture riches into acquisitions. Earlier this year, the company raised $1 billion in an equity funding round to support international expansion. This year alone, Klarna acquired Apprl in July, as well as marketing site Hero that same month after buying merchandise content site Toplooks in March. Along the way it has accumulated 20 million users in the U.S.
