Klarna dips its toe in the savings market with Raisin
Klarna, the Swedish buy now, pay later fintech, has partnered with Raisin, the German online deposit marketplace, to offer higher interest rates to German retail customers.
The $5.5 billion start-up – which reported its first annual loss in 2019 – will offer its online-only products through Raisin’s marketplace WeltSparen.
One of Klarna’s initial offerings is an overnight money account – i.e. the borrower must pay the funds back with interest by the next business day. This account has an interest rate of 0.35%.
As of Wednesday, German customers on Raisin could access Klarna’s deposit products. Other account offerings range to terms of up to 48 months, and both firms claim the one-year term account is seven times the average savings account rate in Germany.
“We’re on an exciting journey from being purely a payment provider to a comprehensive shopping ecosystem,” says Klarna’s DACH managing director Robert Bueninck. “Through our cooperation, we’re enabling our customers to easily build up long-term assets.”
Klarna, which works with more than 205,000 retailers including H&M, Spotify, and Nike, employs 2,700 people over 17 countries.
Last year, Klarna, Europe’s joint-largest fintech by valuation alongside $5.5 billion UK challenger bank Revolut, moved across the Baltic sea to America. It inevitably met stiff competition as it pitted itself against services offered by the likes JP Morgan Chase, Visa, Mastercard, American Express, and PayPal.
The expansion seems to have taken its toll on the fintech, which reported a net loss of SEK 902 million ($92.8 million), a SEK 7.2 billion ($740 million) revenue dip from January to December 2019.
Profits have been slowly declining for the company which was once hailed as the firm bucking the trend of unprofitable fintechs. Last year, 2018 profits of SEK105 million ($10.8 million) plummeted from a figure triple the size the previous year.
Klarna’s partnership with Raisin sees it open up another revenue stream which will likely help in its long-term plans to become profitable again.