Buy now pay later firm Klarna sells its Checkout unit for over €480m 

The Swedish company's buy now and pay later facility allows customers purchasing items online to spread the cost out over a number of payments.

Swedish finance company Klarna Bank is looking to get out of one of its key payments businesses after the financial technology giant found the unit created a conflict of interest with peers like Adyen or Stripe.

An investor consortium has agreed to acquire Klarna’s Checkout business in a deal that values the unit at 5.4bn kronor (€484.6m), according to documents obtained by Bloomberg News.

Klarna’s buy now and pay later facility allows customers purchasing items online to spread the cost out over a number of payments. It has long offered merchants two ways of offering its payment options to their customers.

With Checkout, a retailer could work directly with Klarna to make the company’s offerings available on their site but merchants could also work with payment service providers, like Stripe or Adyen, to make Klarna’s offerings available.

On the one hand, Klarna wants to work with them to ensure its offerings get prime placement within their ecosystems alongside rivals like Apple Pay or PayPal. On the other hand, Klarna was competing with them directly to offer the Checkout solution to merchants.

“Klarna is looking to divest the Klarna Checkout to remove the friction and completely focus on working with its distribution channels,” according to the documents. “Thus, creating a simple relationship to all partners without the PSP vs Checkout conflict.” 

For years, Klarna has sought to focus more on building its ties to those payment service providers (PSP) and hasn’t actively developed or sold the Checkout solution since 2021, the documents show. Still, the unit is a major driver of Klarna’s profitability within Europe and commands more than 40% market share in Sweden.

“Klarna Checkout is very dear to me, and the impact it’s had on Klarna’s journey is immense,” Klarna Chief Executive Officer Sebastian Siemiatkowski said in a statement to Bloomberg News.

“I’m so pleased it’s finding a new home.” Deutsche Bank AG served as the sole financial adviser to Klarna on the deal, which took more than a year to put together, according to the statement. The deal also includes a performance-based payment and a revenue share agreement with Klarna.

The consortium is being led by investor Kamjar Hajabdolahi who said they “look forward to engaging with our merchant partners and presenting our plans and road map for the continued evolution of Klarna Checkout”.

Bloomberg