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Blackhawk Network Inc. is partnering with buy now, pay later provider Klarna AB to let consumers use Klarna’s interest-free payment solutions at physical retail locations. The deal, announced Wednesday, will enable consumers to make use of Klarna in-store for such items as groceries, electronics beauty, and more when shopping within Blackhawk’s merchant network. Klarna has more than 150 million active users globally who generate 2 million transactions per day.
Groceries are one the most frequently shopped categories in-store, according to Klarna’s Shopping Pulse Report and a recent survey of consumers in the United States by Klarna reveals 64% of respondents say they are likely to use BNPL on groceries if available. In addition, respondents say they intend to spend more, shop more frequently, and purchase more gourmet food items if BNPL is available in store.
“During a time of strained budgets and increasing costs, our partnership with Klarna is a significant development for retailers and grocers,” Brett Narlinger, head of global commerce at Blackhawk Network, says in a prepared statement. “With buy now, pay later on a major growth trajectory, the collaboration between Blackhawk and Klarna will provide innovative purchasing options for consumers and retailers.”
Despite the popularity of buy now, pay later with consumers, investors are rethinking their position on BNPL providers. Klarna’s valuation has plummeted over the past year from $46 billion to $6.7 billion, an 85% drop. An $800-million funding round earlier this week was led by Klarna’s existing financial backers, including Sequoia Capital, and Commonwealth Bank of Australia, as well as first-time investors such as Mubadala Investment Company and the Canada Pension Plan Investment Board.
In an effort to reassure investors about the company’s strength, Klarna chief executive Sebastian Siemiatkowski said that raising new capital is a reflection of investors’ belief in Klarna’s strategy.
“It’s a testament to the strength of Klarna’s business that, during the steepest drop in global stock markets in over 50 years, investors recognized our strong position and continued progress in revolutionizing the retail-banking industry,” Siemiatkowski says in a prepared statement. “Now more than ever, businesses need a strong consumer base, a superior product, and a sustainable business model.”
In related news, Zip Co Ltd. and Sezzle Inc. have mutually agreed to terminate a merger agreement that was initially announced in February. As part of the termination agreement, Zip will pay Sezzle $11 million to cover, among other things, Sezzle’s legal, accounting, and other costs associated with the transaction. “We believe that mutually terminating the merger agreement with Sezzle at this time is in the best interests of Zip and its shareholders, and will allow Zip to focus on its strategy and core business in the current environment,” Zip chair Diane Smith-Gander says in a prepared statement.
