Klarna
has announced that it will be possible to use its global payments network in conjunction with Xero. The intention is to help small businesses by accepting payments from consumers who want a Buy Now Pay Later option.
Klarna offers consumers the ability to purchase goods and services immediately. But they can choose to have the payment deducted from their account immediately, in 30 days or three interest-free payments.
For Xero customers, offering Klarna alternatives to traditional credit means that they get paid immediately, regardless of when the customer pays up. For consumers there are no high interest rates or hidden fees. Though if consumers cannot pay on time, there are late payment fees.
The Klarna platform offers merchants an alternative to accepting credit cards with a more flexible payment scheme for consumers. Consumers are also checked before each purchase, providing guardrails and anti-fraud mechanisms. These ensure that 99% of lending is repaid and 40% of orders are repaid early.
David Sykes, Chief Commercial Officer at Klarna, says, “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 where gardeners and landscaping services using Xero can now offer a Klarna BNPL payment option, plumbers and heating engineers using Xero can fix their customers’ boilers and let them spread the cost while small businesses involved in the construction industry could spread the cost of smaller projects over three interest-free installments.”
And for Xero customers
There is little information as yet on the Xero platform about this new integration. It is possible to set up Klarna as an alternate bank, but as of January only with manual transaction import. Klarna is not available for Xero customers in Australia. Which is strange as Klarna does operate in Australia. As well as the other regions in which it operates, including the UK, USA, Canada, and New Zealand.
It is not clear whether Klarna is available for Xero in Asian countries where Xero also operates or in South Africa.
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.”
Enterprise Times: What does this mean
There is very little information about how this new integration/partnership will work. There is no entry for Klarna on the Xero App Store. Nor is Xero listed as a supported Platform or Plugin. Hopefully, this will change quickly as Xero customers will want to consider Klarna as a payment option for customers.
