Klarna’s services are now available in Romania
When we heard the news, we were overwhelmed with joy. Some might say – it’s only an alternative payment solution provider, what’s so exciting about it? Well, we beg to differ! Klarna was once Europe’s biggest fintech unicorn and is still an important player in the BNPL scene. Its presence in a country where not long ago half of the total population did not even hold a bank account, is a sweet sign that things are finally moving in the right direction.
Klarna’s services are available in 22 markets. In recent years, the company expanded into Greece, the Czech Republic and Poland, but it has kept avoiding Romania, due to high non-payment risk factors. In fact, our country was used as a negative example by one of the founders during an interview with Financial Times, in 2015.
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Things changed a lot in the latest years and the Romanian e-commerce industry reached the threshold of 6.3 billion euros at the end of 2022. At the same time, revenue is expected to show an annual growth rate of 12.75% by 2027.
Taking notice of all these positive changes, Klarna announced not long ago that Romanians can now access their Pay in 3 instalment payment service, alongside the Klarna mobile application, both guaranteeing fast, safe and efficient payments. Brands available now through the Klarna app include: ABOUT YOU, Tommy Hilfiger, BSB Fashion, Zoot, Footshop, with more to come in the coming months.
The expansion into Central and Eastern Europe is set to further enhance the company’s already impressive portfolio of over 500,000 partners globally.
What sets Klarna apart is their alternative payment offers. The ‘Pay in 3’ option gives users the opportunity to split their payment into 3 interest-free instalments and gives merchants the opportunity to come up with flexible payment options to customers.
A little bit about Klarna
Founded in Stockholm, Sweden, in 2005 Klarna’s objective was to create a safer, simpler, and more flexible way for consumers to shop and pay online.
Initially, Klarna focused on providing services for online storefronts in Sweden, acting as a middleman between buyers and sellers. Their innovative model allowed customers to receive goods before payment was due, and Klarna would assume the credit and fraud risk for the online retailers. The platform proved really successful due to its simplicity and user-friendly approach, and by 2007, Klarna had expanded its services to Norway, Finland, and Denmark.
In the following years, Klarna experienced significant growth and international expansion, reaching Germany in 2010 and the US by 2015.
Klarna’s business model also evolved over time. Initially, they focused on invoice-based payments but later shifted towards providing more flexible financing solutions, like instalment payments and direct payments, for both online and brick-and-mortar stores.
One of Klarna’s significant developments came in 2019 when it launched its ‘buy now, pay later’ service in the US, offering interest-free instalment plans. This helped Klarna become a noteworthy player in the fintech space.
Why Klarna?
When pitching their solutions to merchants, Klarna shows pretty impressive stats. About 40 million shoppers use Klarna’s mobile apps, and 2 out of 3 users are millennials or Gen Z. Both Gen Z and millennials cited convenience and safety as their main reasons to shop online and what Klarna offers is exactly what makes these users choose it as their main way to pay.
Moreover, the accessible payment solution makes new customers feel more at ease with purchasing from a new brand. So this is why the integration of Klarna in both already established online stores or small retailers can bring immense benefits.
How does it work?
The payment solution launched in Romania, ‘Pay in 3’, allows consumers to split their payments into 3 interest-free instalments, which must be paid once every 30 days, starting from the date of purchase. The goods will be received before the full payment of the amount and then monthly payments will be debited from the consumer’s card.
Klarna for developers
Developers for major ecommerce platforms praise Klarna’s constant efforts to work with all experts in the ecommerce ecosystem and make integration seamless.
There is a comprehensive page on their website featuring extensive guides, from adding the Express Checkout button, to adding Klarna payments to Stripe, Adyen and other payment processing platforms.
Finally, Klarna in Romania
For Klarna, Eastern Europe was not a primary focus. Until now. The incredible developments in e-commerce and the shift in shopping habits have started to make this part of Europe appealing.
As for Romania, what was a deciding factor 7 years ago, mainly low occurrences of card payments and lack of a veritable credit scoring, is a long distance memory. Now, more than half of the total population use a card when paying online. There is also a law waiting to be passed in Parliament, which will eliminate cash payments to merchants. All these, together with the boom in online shopping, made Klarna decide that “the time has come to take this step and offer our platform to small and large companies that want to increase customer loyalty, while offering them a solution for a stress-free shopping experience” – said Lukasz Dwulit, Head of Klarna in Romania.
As for competition, Mokka and Paypo took advantage of Klarna’s reluctance to expand in Romania, launching alternative payment solutions. But Klarna comes with the promise of seamless integration for merchants, a bug-free platform, and some unique features that may make it a desirable choice over other payment providers, like : the “buy now, pay later” option, a smooth checkout, a global reach, and what’s most important – the fact that it assumes all credit and fraud risks, making it a safe option for merchants.
Conclusions
Klarna’s arrival in Romania signifies a milestone for the ecommerce landscape in our country. This move acknowledges the potential in these markets and their gradual evolution towards a more reliable, digitally-driven economy. At the same time, it brings eCommerce to a larger demographic, allowing shoppers in these regions to enjoy the same conveniences and benefits of online shopping as those in more mature markets.
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