Alibaba's (NYSE:BABA) payment affiliate, Ant Financial, has acquired a stake in Klarna, a European fintech company, strengthening an existing relationship between the two.
Klarna picks up the tab for consumers and then invoices them for payment. Customers generally have 14 to 30 days to pay for their purchases. The service has reportedly resonated with millennials who are skeptical of using credit cards. Klarna has a customer base of 85 million people who are using the app online and in stores. It now has relationships with more than 200,000 retailers and e-commerce platforms including AliExpress, Alibaba's international e-commerce platform. With a valuation of $5.5 billion, the Snoop Dogg-backed company is Europe's most valuable fintech.
Sebastian Siemiatkowski, CEO of Klarna, told Reuters the deal should enable the company to expand into new markets around the world. He said Klarna will stay away from China, where competition is fierce and innovation in the app retail and payments markets is "just tremendous." Ant Financial operates AliPay, a payment app in China, and is looking to expand that service internationally.
This investment comes at a time when Chinese companies are taking a beating over the coronavirus that has now killed about 3,000 people and infected aobut 91,000 . This week AliExpress warned customers that they may face delivery delays a result of the epidemic. By deepening its partnership with Klarna, Ant can have a piece of expanding into European markets and access Klarna's network of European merchants.