Ant Financial, the fintech arm of Chinese online marketplace Alibaba, bought a small stake in Swedish payments app Klarna, the startup said on Wednesday.
Why it matters: Ant Financial has embarked on a series of moves to tap European consumers, as the Chinese online payments market is effectively saturated by the WeChat Pay and Alipay duopoly.
- Tencent is also looking to expand into Europe, which is becoming a new arena for competition between China’s biggest apps.
“Alipay, and the wider Alibaba Group, have truly set the global pace on retail innovation and the app economy. We are delighted in this confidence shown in Klarna in defining the future of payments and shopping.”
— Sebastian Siemiątkowski, Klarna CEO
Details: The investment accounts for less than 1% of Klarna’s equity and was comprised of existing and new shares, Reuters reported citing a source familiar with the matter.
- Klarna offers a “buy now, pay later” credit service, enabling shoppers to purchase goods and pay in 14 to 30 days.
- Klarna’s service is already available on Aliexpress, Alibaba’s overseas e-commerce platform.
Context: Ant Financial announced a partnership in November with French startup Worldline to bring Alipay into Europe to provide payment services to Asian tourists. At least another six European mobile wallet platforms, together accounting for 5 million users, are partnering with Alipay to offer payment services on the continent.
- One of Ant Financial’s biggest moves into European fintech was the $700 million acquisition of UK-based payments group WorldFirst, in February 2019.
- Tencent, whose WeChat Pay is Alipay’s biggest competitor in Chinese digital payments, has also been making moves into Europe.
- In 2018, Tencent led the Series B of German online bank N26, which raised $160 million. In January 2020, it led another Series B, this time for French digital payments app Lydia, which raised $45 million.
- Founded in 2005, Klarna is valued at $5.5 billion. According to the Financial Times, Klarna’s investors include global payments provider Visa, New York investment firm BlackRock, and venture capital group Sequoia Capital.
- The Swedish company says it is powering 200,000 retailers around the world, including H&M, Asos, Expedia Group, Ikea, Farfetch, Adidas, Spotify, Samsung, and Nike.
- It also counts 80 million customers globally, and “has more than 200,000 more monthly app downloads than the nearest US competitor.”
- In 2019, Klarna’s revenue increased by one-third on an annual basis to $740 million. But a push into the US market and heavy credit losses led to a net loss, according to the Financial Times.