‘No concerns’: Klarna boss unfazed about big banks’ BNPL plays

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‘No concerns’: Klarna boss unfazed about big banks’ BNPL plays

By Dominic Powell

The Australian head of buy now, pay later outfit Klarna has dismissed concerns over Commonwealth Bank’s recent foray into the sector, saying the big four bank’s instalment payment services would likely complement rather than compete against the likes of Afterpay and Zip.

Fran Ereira, Klarna’s Australian general manager, told The Age and The Sydney Morning Herald she wasn’t fazed by the CBA’s announcement last month it would launch a new BNPL service, despite fears it could put a squeeze on the burgeoning local industry.

Flybuys boss John Merakovsky has struck a new partnership with Klarna’s Australian managing director Fran Ereira.

Flybuys boss John Merakovsky has struck a new partnership with Klarna’s Australian managing director Fran Ereira.Credit: Simon Schluter

“We’ve been across this for quite a number of months, and to us what they’re doing is complementary,” she said. “At the end of the day what they’re doing is allowing a credit card user to pay in instalments. There’s no marketing, no personalisation, no content curation.

“We don’t foresee them trying to play in our space... I think they talk to two very different audiences.”

Commonwealth Bank is a 5 per cent shareholder in Klarna, and the $153 billion bank’s announcement in mid-March sparked warnings from investors and analysts that some buy now, pay later operators could be put under pressure by the move.

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However, CBA’s offering is more simplistic than those provided by Afterpay or Klarna, which promote their services as also acting as a marketing tool for businesses rather than just a payment solution. CBA’s group executive for retail banking, Angus Sullivan, said last month competition against Klarna would likely be only “on the margin”.

“What [CBA and Klarna] are looking to do is ensure we both grow and continue to grow in this market,” Ms Ereira said. “We have no concerns at this point.”

On Tuesday, Klarna announced it had also struck a new partnership with Coles and Wesfarmers-owned loyalty giant flybuys which will allow Klarna users to claim rewards points when purchasing through the platform.

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For every dollar spent, users will receive one ‘vibe’ point which can then be converted into three flybuys points.

However, customers will only receive the rewards upon repaying their instalments, with flybuys chief executive John Merakovsky saying part of the partnership’s goal was to incentivise repayments.

Klarna Australia managing director Fran Ereira.

Klarna Australia managing director Fran Ereira.Credit: Simon Schluter

“This is to reward responsible spending. We view this as a key part of the partnership, and to any criticism about buy now, pay later, this is an incentive that rewards the right type of behaviour,” he said.

Late fees comprise a material part of buy now, pay later companies’ revenue, with Afterpay booking $35 million in late fees for the first half of 2021.

Flybuys is also hoping a new partnership with Klarna will attract more younger users onto the popular rewards platform and vice versa, with Mr Merakovsky noting there was a significant opportunity for older Australians to become more familiar by BNPL services.

Partnerships are becoming increasingly popular in the buy now, pay later sector as the industry’s numerous smaller players attempt to gain market share from the likes of Klarna, Afterpay and Zip. Recently, BNPL service OpenPay announced it had partnered with St John of God hospitals to allow patients to split their surgery payments into instalments.

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