Swedish buy now, pay later company Klarna introduces a $7.99 monthly subscription plan called Klarna Plus
Courtesy: Klarna
Swedish financial technology company Klarna is launching a monthly subscription plan in the US to attract its most frequent users ahead of an initial public offering planned for this year, the company told CNBC.
The product will be announced later Wednesday and will cost $7.99 a month, the Stockholm-based company said.
Users of the subscription plan, called Klarna Plus, will receive no service fees, earn double rewards points and have access to select partner discounts including Nike and instacartaccording to marketing director David Sandstrom.
Buy now, pay later services like Klarna and Say have gained popularity in recent years as more Americans rely on a new form of credit enabled by fintech. The services usually divide a purchase into four payments.
When Klarna users shop outside the company's network of 500,000 retailers (in places like Walmart, Aim, Amazon and Costco: pay between $1 and $2 in transaction fees.
“The main proposition of Klarna Plus right now is that there are no service fees,” Sandstrom said. “So if you love Klarna and you love shopping at Target and Walmart, it makes a lot of financial sense.”
Possible IPO
Klarna's monthly plan is the latest example of a fintech player developing its offerings to drive recurring revenue. Wall Street investors tend to favor subscription revenues because of their predictability over one-time transactions. Rival Affirm has explored its own subscription plan, although it hasn't launched one yet.
The approach is especially timely as Klarna approaches an initial public offering that could value it at more than $15 billion, Sky News reported in November. Klarna CEO Sebastian Siemiatkowski told Bloomberg this week that a listing in the United States, the company's largest market, was likely imminent.
Achieving that valuation would be a redemption of sorts for Klarna. The company was the most valuable startup in Europe before a collapse made it the poster child for so-called “down financing rounds.” Klarna's valuation plunged 85% to $6.7 billion in 2022 as rising interest rates slowed high-flying fintech companies.
Klarna said in a statement to CNBC after publication that no timeline for a potential IPO has been set.
Klarna Plus could help persuade investors that the company can grow beyond its core product. The subscription, which was piloted in Utah for six months last year, is a “no-brainer” for about 15% of the company's most frequent users, Sandstrom said. The company said it has about 37 million American customers.
“What we have to prove to ourselves and the market is that we can add a new type of revenue stream to Klarna,” Sandstrom said. “That's something a lot of companies have struggled to achieve.”
Correction: This story has been updated to correct that Klarna's subscription plan, Klarna Plus, was tested in Utah after the company corrected information it had previously provided. It was also updated to remove mention of a high-yield savings account after Klarna retracted information about the product after it was published.
