JPMORGAN Chase’s payments processing unit is partnering with fintech Klarna to expand buy now, pay later (BNPL) options for its merchants.
JPMorgan Payments will provide some 900,000 businesses the ability to offer Klarna’s fast-credit options to their customers, according to a statement on Monday (Feb 10).
It means Klarna, which is targeting a US initial public offering this year, will be available through the world’s largest merchant acquirer, which processes US$2 trillion payments a year.
“We in the more recent years have become a third-party network such as Amex and PayPal,” Sebastian Siemiatkowski, chief executive officer of Klarna Group, said. “We are a bank, so this is the natural evolution. We are moving into a world with increased competitive pressure with retail banking services.”
The Stockholm-headquartered fintech has added Stripe, Adyen, and Worldpay to its distribution roster in recent months, after selling its own checkout business last year.
Klarna, which has 85 million customers globally, has been rapidly expanding in the US. An American banking license is one of the options Klarna is exploring, which would give the firm the ability to “control even more customer experience and provide a richer service”, Siemiatkowski said.
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For JPMorgan, the tie-up represents another toehold in buy now, pay later credit – this time through its payments business, which helps merchants around the world take payments from customers.
Max Neukirchen, co-head of global payments for JPMorgan, said that there’s been “increasing demand for buy now pay later solutions, especially for Klarna”, and the partnership would make it easier for clients to add this payment method.
“Klarna is now the first one but typically clients would want options there too and we want to provide those options,” he said. Other major BNPL providers include Affirm Holdings and Afterpay.
The bank’s credit card division banned customers from using Klarna or Affirm last year, arguing that such options “are a form of credit” and that the bank did “not generally allow customers to pay for credit products” with their credit cards. For those customers, JPMorgan has long had its own buy now, pay later option known as Chase Pay Over Time.
It’s also a further sign of a maturing fintech sector, with more firms providing their technology to incumbent banks. Wise, for instance, said late last year it was teaming up with Morgan Stanley and Standard Chartered to offer its foreign exchange infrastructure. BLOOMBERG
