Recently, Commonwealth Bank of Australia partners with Klarna, buy now pay later (BNPL) firm with an investment of 200 million dollars and launched the payment provider service in Australia. Besides, the Commonwealth Bank will now own half of Klarna’s Australian operations and New Zealand and also keeps possession of the right to partner with the Klarna organization in Indonesia.
Also, the firm Klarna is supported by Sequoia Capital and rapper Snoop Dogg. Australia’s bank will be holding a 5.5 percent stake in the company after it had made an initial investment of 100 million dollars last year.
Commonwealth Bank of Australia (CBA) remarked that Klarna was founded in 2005 and has more than 85 million customers who use its services to purchase goods and services from 200,000 merchants. Further, CBA’s last funding round in last August valued the fintech firm at 5.5. Billion dollars.
Regardless, CBA’s investment comes in when BNPL firms have gained popularity among the customers by offering an easy alternative to credit cards with small installment loans.
Matt Comyn, CBA Chief Executive Officer, said,
By partnering with Klarna, we are bringing together our market-leading digital technology, merchant relationships and strong customer network with Klarna’s innovative payments technology and integrated shopping experience for the benefit of CBA customers and many more Australian consumers.
After an initial investment of US 100 million dollars, Commonwealth bank had further invested the US 200 million dollars in Klarna Group at the same value to increase the strategic alignment, by bringing additional rights and to gain awareness to Klarna’s international growth. The total investment of US 300 million dollars brings an increase in CBA’s shareholding in Klarna’s group to 5.5 percent from its initial stake of 1.8 percent.
CEO of Klarna Group, Sebastian Siemiatkowski, stated that it is an exciting day for CBA, Klarna, and Australia as a whole and they have already developed a strong working association with CBA. He further remarked that they are looking forward to providing more opportunities together for their customers in the forthcoming months and years.
Also, these firms, along with bellwether Afterpay Ltd have caught intense regulatory scrutiny, with few implying that this business model should be treated as bank loans.