(Bloomberg) -- Stripe Inc. will allow retailers to add Klarna Bank AB's buy-now-pay-later service as a purchasing tool for customers, a deal that pairs up two of the world's most valuable financial technology startups.
The business partnership comes at a time when rivals are striking deals worth billions in a bid to win a share of the increasingly competitive flexible repayment industry.
Merchants that use technology from Stripe, last valued at $95 billion, will be able integrate Klarna's payment methods on their websites, according to a joint statement from the two companies. The move will vastly increase Klarna's potential network of sellers, while retailers with Stripe can access flexible spending options to boost their sales.
Stripe competes with Square Inc. and PayPal Holdings Inc., both of which have inked sizable deals with Klarna rivals. In August, Square said it would buy Australian buy-now, pay-later company Afterpay Ltd for $29 billion, while PayPal bought Japan's Paidy for $2.7 billion in September.
Klarna, currently worth $46 billion, has done partnerships like this previously but “never at this type of scale,” Chief Technology Officer Koen Koppen said in an interview. “In the near term, the biggest impact that this will have for Klarna is further accelerating our U.S. growth.”
Other partners Klarna works with include Adyen NV, Adobe Commerce and Verifone, according to its website.
By giving consumers flexibility to pay for purchases over the course of weeks or months, Klarna can boost the customers and order values of Stripe users, the companies said. The first Stripe retailers that integrated Klarna saw an average 27% rise in sales.
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