THURSDAY PRO // With a presence in France since June 2021, the Swedish fintech Klarna wants to take advantage of the mania of partial payments in order to establish itself with traders and consumers. Digital spoke with Eric Petitfils, the boss of Klarna France, to enlighten us about this phenomenon.
Forget consumer credit, here is the split payment. Increasingly popular, this payment method flourished dramatically during the Covid-19 pandemic. The global installment payments market quadrupled between 2018 and 2020 to $ 80 billion, according to Kaleido Intelligence. It could triple by 2025 to $ 250 billion. Enthusiasm for BNPL solutions (Buy now, pay later) France also wins, where the industry should weigh almost 25 billion euros by 2025, ie one tenth of the world market, while it reached 6 billion euros in 2019, according to data from the company Xerfi.
Many start-ups are placing themselves in this thriving market and intend to take advantage of it. This is especially the case of the Swedish fintech Klarna, a global reference in the field, which landed in France in June 2021. An arrival that coincided with a spectacular round of financing of 639 million dollars, which led to its valuation at 46 billion dollars.
If the Scandinavian company is valued so well, it is because it was able to capitalize on the distribution of payments in order to make it a growth lever for traders. Klarna has indeed developed a mobile application designed to allow consumers to plan their next purchases. And all the data that comes from them can serve as a basis for Klarna to help marketers better predict consumer buying behavior.
It is with this B2B2C strategy that Klarna made payment popular smooth (soft), even managing to make it glamorous with prestigious investors like rappers Snoop Dogg and ASAP Rock. In addition to its non-partial payment approach, Swedish fintech benefits from a favorable framework. “Consumers are increasingly turning to debit cards and are reluctant to use credit cards because they are heavier products to keep up with larger commitments. As a result, they lose interest in cumbersome solutions and look for solutions that will meet a need at a given time. also witnesses of a cash management phenomenon where it is important to be able to distribute payments “.analyzes Eric Petitfils, the boss of Klarna France.
To expand its offer, the company completed several acquisitions last year, such as Inspirock, which seeks to attract travelers, or Stocard, which offers loyalty solutions. “Our vision is to exceed payments and provide drivers of growth to our partners”, assures Eric Petitfils. But while Klarna’s investment fuels its growth, as evidenced by its gross business volume that rose 42% in 2021 to $ 80 billion, it also boosts its profitability.
Thus, the Swedish fintech announced operating losses of 748 million dollars in 2021, compared to 150 million dollars in 2020. But this is the price to expand internationally and meet the appetite of competition. Proof of the euphoria that the industry is gaining, Block (ex-Square) did not hesitate to put $ 29 billion on the table to grab Afterpay. In France, start-up Alma is also trying to do well, especially under a € 115 million fundraiser announced last February, while La Banque Postale opened an exclusive subsidiary to share payments in March.
The dynamics of the industry are attracting the attention of regulators
To date, Klarna claims 1.3 million active users in France and 2,200 affiliates. Globally, the Scandinavian company claims to reach 147 million buyers and has 400,000 trading partners. However, the growth of Swedish fintech and other industry players is attracting the attention of regulators, who fear that BNPL solutions could lead to increased debt, especially to younger consumers.
For France, as for the other countries of the Old Continent, everything will have to be decided in Brussels as part of the revision of the European Consumer Credit Directive. The French Minister of Economy, Bruno Le Maire, had also hinted at the end of 2021 that the government would take advantage of the European Union’s tricolor presidency to support a European directive adapted to new uses around consumer credit. “Regulations provide a guarantee of trust”, believes Eric Petitfils. A more regulated framework will also provide an opportunity to mature the installment payments market, which could ultimately accelerate industry integration.