The UK is the world’s third biggest e-commerce market in its estimation (£192 billion transacted in 2020), and buy now pay later transactions will account for 10% of all sales by 2024 in an overall e-commerce market worth £264 billion and Klarna has been leading the industry.
The Swedish-based ‘buy now, pay later’ provider recently unveiled a new "Pay in 4" payment option on a physical Visa card which will bring the flexible payments experience to in-store payments. The card has only just been released in the UK and we will see Klarna’s advertising spend increase as it launches its new service.
The BNPL provider has reported considerable losses driven by its rapid expansion into new markets, creating a rise in the number of credit defaults. This was expected as the number of customers acquired ballooned, a percentage of which defaulted on payments. Nevertheless, Klarna’s plans to grow its market share as fast as it could has worked out as we have seen the BNPL sector becoming more and more competitive with PayPal launching a similar service and rivals such as Zilch, NewDay and Clearpay ramping up their advertising spend and marketing activities. High street banks such as Santander have also entered the sector. The bank launched Zinia across its European markets as it looks to boost revenues and fight off fintech competition.
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