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Sweden’s Klarna Bank AB enjoyed a good year in 2017, as documented by results the privately held online-checkout and financing specialist released on Wednesday. The firm, which was founded in 2005 and has operated a U.S. unit, Klarna Inc., since 2015, had already achieved distinction by ranking third among so-called payments unicorns, or companies boasting $1-billion-plus valuations. At $2.5 billion, Klarna is outranked only by One97, operator of India’s Paytm mobile-payments system ($5.7 billion) and U.S.-based Stripe ($9.2 billion). One of Klarna’s backers is Visa Inc.
The latest, albeit limited, glimpse into Klarna’s financials shows it racked up total operating revenues of $548 million last year, based on the latest exchange rate, up 27% from 2016. Of that, it took in operating income of $63.4 million and net income of $41.8 million.
The company says it added 26,000 new merchants, bringing its total to 89,000. It did not break out how many of these are now in the United States. Some 19 million consumers used Klarna for the first time last year, the company says.
In June, Klarna was granted a banking license in Sweden, an event the company clearly sees as having big potential for its operations globally. “I am proud to say that Klarna has already played a role in disrupting payments services in order to provide the smoothest experience for merchants and consumers. Now we have even more possibilities to drive that change by broadening our offering and the ability to be deeper in the value chain,” said Sebastian Siemiatkowski, co-founder and chief executive, in a statement.
Klarna got its start streamlining online checkout with a one-click method, then added financing options that now include the ability to pay in installments over a period of months, putting it in competition with traditional credit cards. It has lately applied a subscription-payment model to products that wouldn’t normally be paid for that way, including golf clubs through a deal with TaylorMade Golf Co.
Another e-commerce processor looking to expand into markets beyond conventional e-commerce is PayPal Holdings Inc. Earlier this week, the company shut down two early efforts to process for brick-and-mortar stores so that it can concentrate on its access to tokenized payments through the major card networks to expand into physical commerce.
In 2012, PayPal began allowing its users to make payments in select stores by entering a phone number and PIN code in the merchant’s point-of-sale terminal. Some major chains, including Home Depot Inc., adopted the service early on. PayPal followed that up a year later with a similar service that relied on a so-called payment code. PayPal will not disclose how many retailers were using either service
Both of these services have now been officially discontinued in the wake of agreements PayPal has made since 2016 to make its network more amenable to the major card brands in return for access to their tokenization engines for PayPal transactions, including those taking place at cash registers.
