Klarna Outshines Affirm by Securing Walmart Partnership, Elevating IPO Potential

In a significant move for the buy now, pay later (BNPL) sector, Swedish fintech giant Klarna announced a partnership with Walmart following its recent IPO filing. This exclusive agreement marks a pivotal shift, as Klarna takes over the BNPL loans previously provided by rival Affirm.

Klarna Partners with Walmart for Exclusive BNPL Loans

Klarna will deliver BNPL loans to Walmart customers through its majority-owned fintech startup, OnePay, which is also backed by Ribbit Capital. The transition to Klarna’s services is expected to occur later this year, enhancing the shopping experience for Walmart customers.

Impact on Affirm’s Stock

Following the announcement, Affirm’s stock experienced a notable decline, dropping by 8% and trading just above $46 by midday. This development highlights the competitive landscape between these two fintech giants.

Klarna vs. Affirm: A Rivalry in the BNPL Space

• Affirm: Based in San Francisco, Affirm has been focused largely on the U.S. market and went public in 2021. The company recently reported a GAAP net income of $80 million.
• Klarna: After facing a significant valuation drop, Klarna is rebounding, reporting a net profit of $21 million in 2024, a sharp contrast to its $244 million loss in 2023.

Max Levchin, CEO and co-founder of Affirm, expressed a desire to distinguish his company from competitors, including Klarna. He emphasized the importance of earning revenue from individual transactions rather than relying on marketing revenue. However, a Klarna spokesperson countered this claim, stating that the majority of Klarna’s revenue stems from transactions.

Klarna’s Expanding Presence in the U.S.

While Klarna has a broader global reach compared to Affirm, it is making significant strides to strengthen its position in the U.S. market. In an interview with TechCrunch, Klarna identified the U.S. and Germany as its largest markets, with the U.S. frequently leading on a quarterly basis.

The Significance of Partnering with Walmart

Partnering with Walmart, the largest retailer by revenue, is expected to amplify Klarna’s influence in the U.S. market. Walmart reported an astounding $441.8 billion in revenue from U.S. operations last year, making it a lucrative partner for Klarna’s growth.

For more insights into the evolving landscape of fintech and BNPL services, visit our Fintech Updates page, or check out this Forbes article for a deeper understanding of BNPL services.