‘Buy now, pay later’ giant Klarna launches in Irish market

Swedish firm allows consumers to split cost of online purchases into three payments

Klarna Bank, the Swedish payments company, has officially launched in the fledgling 'buy now, pay later' (BNPL) market in the Republic, aiming to take advantage of the surge in online shopping that has been turbocharged by the Covid-19 pandemic.

It comes four years after the fintech first signalled its interest in establishing a presence in the Republic, now its 18th market.

The 16-year-old company, which was valued at almost $46 billion (€39.7 billion) by a funding round led by Japanese conglomerate SoftBank during the summer, has entered the Republic with a product, called ‘Pay in 3’, that allows consumers to shop online and split the cost of purchases in three interest-free, fee-free equal payments.

Klarna co-founder and chief executive Sebastian Siemiatkowski, told The Irish Times that the international bank may look in time at launching other products, such as an instant-payment solution, and longer-term financing for the purchase of a sofa or a computer. The Irish presence currently consists of five employees, led by Colin Creagh, and the plan is to double the headcount in the near future, he said.


Klarna's initial domestic partners include athleisure brand Gym+Coffee, women's underwear specialist Yummie and make-up and hair care retailer Luna by Lisa. The company started early-stage testing with Irish merchants and Irish consumers in May this year before launching officially this week.

The group's 250,000 retail partners globally include names such as H&M, Ikea, Samsung and Macys.

BNPL companies make their money by charging merchants 2-5 per cent of the purchase amount of a product. Klarna does not charge late-payment fees or interest rates on the Pay in 3 offering, but starts off with customers with small transactions to develop a profile for further credit.

In markets where it has longer-term financing options ranging from six to 36 months an interest rate can apply.

Market growth

A report from research group Research and Markets published in mid-July found that the Irish BNPL market is expected to grow by about 50 per cent every year to reach about $1.2 billion (€1 billion) by 2028. It's currently worth about $267 million.

Humm is one of the main providers of the financing tool in Ireland at present. Formerly known as Flexifi Europe, a subsidiary of the Australian consumer financial services group, Humm offers BNPL services for hundreds of retailers and service providers across the State.

“Ireland is a really exciting market for us, as people turn away from credit cards,” said Mr Siemiatkowski. “Traditional high-cost models like credit cards are built on charging interest and late fees to the rest. That’s why we offer flexible, transparent and fair payment options without charging interest or fees.”

Last month, Irish-founded payments group Stripe announced that it would allow Klarna's BNPL service as a purchasing tool for customers, a deal that pairs up two of the world's most valuable financial technology start-ups.

The business partnership comes at a time when rivals are striking deals worth billions in a bid to win a share of the increasingly competitive flexible repayment industry.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times