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Macy's Investing in Swedish Installment Payments Company Klarna

By Eric Volkman – Oct 7, 2020 at 5:47PM

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The deal includes a partnership between the two companies in which Macy's shoppers can opt for installment payments for their purchases.

Macy's (M 1.21%) is getting into the next-gen retail-financing game. The company has agreed to invest in privately held fintech company Klarna, a Sweden-based business that specializes in providing installment financing. In addition to the investment, according to the announcement Klarna released on Tuesday, Macy's will team up with Klarna in a five-year partnership. 

The tie-up will see Klarna provide its technology for online sales, meaning that Macy's customers will have the option to pay for certain items in four equal, interest-free installments when they check out.

Klarna did not spell out any of the financial details of either the Macy's investment or the partnership between the two companies.

Facade of a Macy's store in San Francisco.

Image source: Getty Images.

"With a strong focus on digital agility and innovation, Macy's continually seeks strategic partnerships that enable us to provide our customers with the best possible shopping experience," Klarna quoted the American retailer's chief digital officer, Matt Baer, as saying.

Baer added that the Macy's/Klarna partnership would "help us reach wider audiences looking for seamless alternative payment solutions that provide them with financial control and convenience." He did not provide any estimates as to how the arrangement might impact Macy's business.

The Swedish company's "buy now, pay later" solutions have begun making some headway in the retail segment. Klarna has a deal similar to Macy's in place with H&M, a popular fashion retail chain operating throughout Europe and also headquartered in Sweden.

Macy's, a retailer that has been increasingly burdened by a still-large, bricks-and-mortar footprint, is attempting to take better advantage of online commerce opportunities.

The Klarna deal seems to be a hit with investors. They bid Macy's shares up by nearly 2.6% on Wednesday, a jump that exceeded the 1.7% gain of the S&P 500 index on the day.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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