Klarna has partnered with Adyen to offer buy now, pay later in store

The Swedish company Klarna will collaborate with the Dutch fintech in the field of payment transactions Adyen to bring its popular ‘buy now, pay later’ service to physical stores.

The company said Thursday it had entered into an agreement with Adyen to add its payment products as an option to physical payment terminals used by the Amsterdam-based fintech’s merchant partners.

Klarna will be included as an option in more than 450,000 Adyen payment terminals in physical locations as a result of the deal, the companies said. The partnership will initially launch in Europe, North America and Australia, with a wider rollout planned later.

Klarna’s buy now, pay later, or BNPL, service allows users to spread the cost of their purchases over a period of interest-free installments. The service is mainly associated with online shopping, which currently represents around 5% of the global e-commerce market, according to Klarna.

Targeting consumers in-store has become an increasingly important priority as Klarna and other companies in the sector such as Block‘s Afterpay, Affirm, Zip, Sezzle and Zilch are trying to expand their reach.

The move expands a previous agreement Klarna had made with Adyen on e-commerce payments.

“We want consumers to be able to pay with Klarna at any checkout, anywhere,” David Sykes, Chief Commercial Officer at Klarna, said in a statement on Thursday.

“Our strong partnership with Adyen gives a huge boost to our ambition to bring flexible payments to the high street in a new way.”

Adyen’s head of EMEA, Alexa von Bismarck, said the deal was aimed at giving consumers flexibility at checkout, adding that “consumers highly value the in-store touchpoint and value brands that allow them to pay how they want.”

Earlier this year, Klarna sold Klarna Checkout, the company’s online payment solution for merchants. This left the company competing less directly with payment gateways, including Adyen, Stripe and Checkout.com.

Klarna’s deal with Adyen comes as the Swedish tech giant explores a long-awaited initial public offering.

Klarna has not yet set a firm timeline for when the company expects to go public, but the company’s CEO, Sebastian Siemiatkowski, told CNBC earlier this year that an IPO for the company in 2024 would not be “impossible.”

In August, Klarna began rolling out a checking account-like product called Klarna Balance, as well as cashback rewards in an effort to convince consumers to move more of their financial lives to the platform.

However, BNPL has attracted criticism from consumer rights campaigners over fears it promotes the idea that consumers are spending more than they can afford. Regulators are pushing for rules to bring the emerging – but fast-growing – payment method under supervision.

The recently elected British Labor government is expected to soon draw up plans for ‘buy now, pay later’ regulation.

City Minister Tulip Siddiq said in July that the government would come up with new proposals “shortly” after multiple delays to the previous conservative government’s regulatory plans for BNPL.