Klarna and Xero partner to bring ‘buy now, pay later’ to SMEs

Klarna, the AI-powered global payments network, has joined forces with small business platform Xero to introduce ‘buy now, pay later’ (BNPL) services to small businesses. This partnership aims to enable businesses to offer their customers more flexible payment options while ensuring they get paid upfront.

By integrating Klarna into their payment solutions, Xero’s small business clients can offer a viable alternative to traditional credit. Klarna’s BNPL option allows consumers to spread the cost of their purchases without the burden of high interest rates or hidden fees. Klarna ensures responsible lending practices by checking a consumer’s eligibility before each purchase and providing clear instalment plans. This helps maintain a high repayment rate, with 99% of lending repaid and 40% of orders repaid early.

David Sykes, Chief Commercial Officer at Klarna, emphasised the evolution of their payment offerings, saying:

“Klarna’s flexible payment options are typically associated with clothes and shoes, but that has been changing for a long time. This partnership brings Klarna’s flexible payment options to micro businesses of all kinds, so business owners can get paid on time, and their customers can choose how and when to pay. This includes businesses like gardeners and landscaping services, plumbers, heating engineers, and even small construction firms who can now offer Klarna’s BNPL option to spread the cost of smaller projects over three interest-free instalments.”

The partnership aligns with Xero’s mission to support small businesses in maintaining healthy cash flow. Bharathi Ramavarjula, SVP Payments & Ecosystem at Xero, said:

“We know that maintaining a healthy cash flow is critical to a successful business, and offering more ways to pay supports increased business growth and getting paid faster. In fact, our recent research report shows that if a business doesn’t offer customers their preferred way to pay, they are prepared to take their business elsewhere. By enabling our customers with more ways to pay, including Klarna, we can help them retain customers and increase their revenue.”

This collaboration provides Xero’s clients with a powerful tool to retain customers while boosting revenue, although the Klarna option is not currently available to Xero customers in Australia.

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