Macys is to take a stake in swedish buy-now pay-later group klarna as part of a partnership under which the us department store chain will offer its customers the possibility to split up online purchases into four interest-free payments.
The high-profile partnership is one of a series of big deals in the us that klarna, europes highest valued private fintech at $10.6bn, has said it wants to complete before launching a possible stock market listing there in the next one to two years.
Macys is giving klarna an unusually long five-year period of exclusivity and is taking a small stake in the swedish group, joining other investors such as hennes & mauritz, sequoia capital, the danish company behind online retailer asos, and chinas ant group.
The us department store chain has struggled to cope with the rise of online shopping and in particular the might of ecommerce giant amazon. it is hoping for a boost from its partnership with klarna, which is popular with younger shoppers because it allows them to receive goods and return them before paying for them.
Sebastian siemiatkowski, klarnas chief executive, told the financial times that the swedish group had good tailwinds in the us right now.
He added: we have a number of other major merchants going live shortly,so we need to continue on this path now. we do see a very tangible shift in the us market. we honestly had spent a long time talking to some of these retailers and they were good conversations but often slow, nowsuddenly they are very focused and decisions are being made.
The number of people using klarna in the us increased more than six-fold in the first half of this year, compared with the same period in 2019.
Matt baer, chief digital officer at macys, said: were excited to embark on a long-term relationship with klarna that will help us reach wider audiences looking for seamless alternative payment solutions that provide them with financial control and convenience.
Mr siemiatkowski has said that coronavirus affected klarna in an odd manner, leading to an acceleration in its growth as people worldwide turned more to online shopping. on tuesday, he highlighted how changing consumer behaviour online made smart and flexible payments essential.
Klarna has faced scrutiny over whether it encourages young shoppers to spend more than they can afford using its credit solutions. its credit losses in the first half almost doubled, causing its operating loss to increase nine-fold to skr690m ($78m) after more than a decade of profitability. it has said that credit losses are normally higher than average when it first enters a country such as the us.
This offering is no longer a sort of nice to have [service] for brands but [is] now becoming central to their online experience, said mr siemiatkowski. theus business should soon be our largest market and when we reach that point, it will certainly be a discussion point of what is next for us.