December 7, 2014
The Swedish e-commerce company has announced plans to expand to the U.S. market in early 2015. A well-known player in Europe for almost a decade, Klarna delivers a much needed payment solution for online U.S. retailers and consumers alike. To drive U.S. expansion, Klarna has recruited past executives from Alliance Data, PayPal, Apple, Treliant Risk Advisors and Green Dot Corporation for top positions in the organisations.
U.S. online retailers have grown disillusioned with existing payment solutions as the poor user experience has led to abandoned checkouts and lost sales for years. It’s common that 90 percent or more of consumers entering a mobile checkout do not complete their purchases, said Brian Billingsley, CEO North America of Klarna, in an official press release. Klarna has a very simple value proposition: We increase conversion at checkout and assume all the risk. Klarna doesn't win if the retailer doesn't win.
We founded Klarna with the vision to simplify buying online. By putting the consumer experience first, we can make the mobile a platform for shopping, and not just browsing, said Sebastian Siemiatkowski, CEO and co-founder of Klarna, in an official press release. Across Europe, retailers who use Klarna have seen increased mobile conversion from a few percentages to close to fifty percent on average. That translates directly into more sales for retailers. Now Klarna is extending that opportunity to the United States.
At its core, Klarna increases simplicity and safety for consumers by separating buying from paying. A consumer making an online purchase enters only top-of-mind information like an email address and zip code to buy an item. From there, Klarna assumes all the risk from the purchase transaction, pays the retailer immediately, and collects the amount due from the consumer within 14 days. Consumers can settle the transaction with any preferred payment method. The process is made possible by Klarna’s proprietary risk assessment protocol. By using advanced data analytics and modeling, Klarna gives approved consumers a seamless buying experience and uses incremental identification to deter potential fraudsters.
Klarna has a proven track record in Europe to fuel its success in the United States, including more than 25 million users and 45,000 retailers including ASOS, Spotify and Zara. The company expects revenues of more than $300 million in 2014 and is used for more than 200,000 transactions per day. It is forecasted to help retailers sell more than $9 billion worth of goods this year.
The Klarna Checkout solution works across all platforms but increases conversion particularly on mobile. The average checkout conversion on mobile is between one and ten per cent, depending on industry and type of goods. For Klarna Checkout the equivalent conversion is about fifty percent.