CBA to take on Afterpay

Commonwealth Bank makes buy now, pay later move with stake in Sweden’s Klarna


Commonwealth Bank’s partnership with Klarna could shake up the local payments market. Picture: iStock.

• JOYCE MOULLAKIS
  SENIOR BANKING REPORTER
  @JoyceMoullakis ‏
  
  CHRIS JENKINS
  DIGITAL EDITOR, BUSINESS
  @mrcjenx
  
• AN HOUR AGO AUGUST 7, 2019
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Commonwealth Bank is taking a tilt at the burgeoning buy now, pay later space with a stake in Swedish Group Klarna.
The move has the potential to shake-up the local market for buy now, pay later services and impact locally listed groups including Afterpay Touch and Zip.
CBA was part of a $US460 million funding round for Klarna which lifted its total valuation to $US5.5 billion, the company announced on Wednesday morning.
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The bank has committed an investment of $US100 million into Klarna. The new tranche of funding made Klarna Europe’s largest private fintech startup, the Financial Times reported.
“We will become Klarna’s exclusive partner in Australia and New Zealand and intend to further invest at the parent and local level to support this partnership,” CBA said in a statement accompanying its 2019-full year financial results.
“We can confirm Klarna intends to launch an offering in Australia and New Zealand in the future,” the Swedish company said in a separate statement.
“We are delighted to be partnering with CBA on this, they are Australia’s largest retail and commercial bank with 7 million active digital customers with a strong focus on innovation and a consumer centric approach. Together we see huge opportunity in serving Australian and
New Zealand consumers and merchants.”
The announcement came as Commonwealth Bank announced a 2019 full year net profit that was down 4.7 per cent to $8.49 billion; short of analyst expectations of $8.59 billion in earnings.
Last week The Australian flagged the Asia-Pacific region had been identified as part of Klarna’s strategic growth agenda.
Klarna is backed by investors such as international technology investment firm Atomico and venture capital houses Sequoia Capital and Permira. Payments giant Visa, which announced its own ambitions in the buy now, pay later space in June, is also listed as an investor on Klarna’s website.
Klarna has more than 60 million customers and 130,000 merchants and generated US$627 million of revenue in 2018.