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Major Chinese mobile wallet Alipay is partnering with Sweden-based online checkout solution provider Klarna and Dutch payments technology firm Adyen to offer Klarna’s "Pay later" option at checkout on Alibaba-owned marketplace AliExpress. While the solution is Klarna’s, Adyen will act as the payment provider that enables Klarna’s proprietary solution on the marketplace.
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Here’s what it means: The solution allows shoppers on AliExpress in Germany, the Netherlands, Austria, and Finland to pay for their orders after delivery, making it easier to test and return items.
- Shoppers can use the solution to test and return items before paying, and make purchases with one click. This payment option is popular among customers and can allow AliExpress to boost its sales: Retailers who have offered Pay later have boosted their average order value by an average of 15%. Klarna will also simplify the checkout process: After a shopper uses Klarna once, they will be able to check out with a single click for subsequent purchases.
- The companies intend to expand the partnership to more markets throughout the year.AliExpress is particularly popular in Russia, Israel, Spain, France, the US, Brazil, and Poland — giving the partnership plenty of room to flourish.
The bigger picture: Access to AliExpress’ network, which covers over 220 countries, could allow both Adyen and Klarna to accelerate their growth initiatives.
- Adyen can continue to scale and compete more effectively with major processors like PayPal, First Data, and TSYS. Adyen has been scaling its business and building out its services since it went public in June 2018. It expanded to Italy and Canada, and introduced an open banking-powered payment service in the UK. Accessing AliExpress’ network adds to Adyen’s growing roster of high-profile clientsincluding Spotify, Uber, and soon eBay — which plans to switch its payment processing from long-term provider PayPal to Adyen mid-2020. The new partnership will likely further accelerate Adyen’s growth: Adyen processed €159 billion ($179 billion) in 2018, up 47% annually from €108.4 billion ($122 billion) in 2017.
- Klarna can increase its brand recognition by reaching a high volume of customers and stand out amid heavy competition.Klarna is growing fast: In 2018, sales volume grew 36% to hit $29 billion. And the firm is looking to further fuel its growth, most recently through its in-store launch at more than 1,200 locations, which could help it to expand its footprint, attract customers, and increase brand awareness. But Klarna faces heavy competition from providers including Affirm, PayPal Credit, and Mastercard because installment payment options are becoming more popular. Offering a service beyond its initial financing option — and doing so through a partnership with a major online marketplace like AliExpress — could allow Klarna to reach even more customers and boost its volume significantly.
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