Klarna has expanded its reach even further via a partnership with UATP, a global payment network which focuses on simplifying payment processes.
The Swedish fintech, which focuses chiefly on its buy now, pay later (BNPL) product, though also active in other areas of financial services, has made its services available to airlines via the partnership.
Klarna will gain access to UATP’s database of airlines and travel agencies, placing itself as the preferred BNPL partner of said companies in EU and APAC countries. The company has noted strong engagement with its offering on travel sites, citing the total value of travel booked through the Klarna platform rising by 50% over the past year.
With travel often a high-cost affair, factoring in flights and hotel bookings and everything in between, there is likely strong demand for BNPL products among the sector’s customer base. Klarna notes that credit cards account for 70% of retail travel payments in the $1tn global industry.
Erin Jaeger, Head of North America, Klarna, said: “Travel is perfect for interest-free BNPL, allowing travellers worldwide to spread the cost of their trips and without getting stuck paying sky-high credit card interest rates.
“This agreement with UATP means we can quickly bring these benefits to many more airlines and tap into the huge growth opportunity which the $1tn travel industry represents for us.”
As BNPL providers like Klarna, as well as other payments providers, have become acutely aware of the opportunities the travel sector poses, airlines and travel agencies have also become increasingly aware of the importance of offering a broad range of payment methods.
For example, Alexei Jurascheck, Head of Payments Technology at travel and tourism agency Tui, and Sergio Signoretti, Chief Financial Officer at online booking site Lastminute.com, both appeared at the Pay360 conference earlier this year.
“Introduction of BNPL is essential for holiday package conversion and has boosted conversion dramatically,” Signoretti told the audience.
“We have to tailor the payment experience when we get to convenience in order for it to be adopted by the people we are targeting.”
Klarna’s targeting of the travel sector comes after a successful H1 2024 for the company, recording 27% year-over-year revenue growth from SEK 10.4bn (€924m) to SEK 13.2bn (€1.16bn).
The company has been building up its presence in North America and its use of Artificial Intelligence (AI), now styling itself as an AI-backed payments specialist, whilst also stepping up global presence through acquisition, such as buying New Zealand BNPL firm Laybuy.
Partnering with UATP further extends Klarna’s global reach by extending its reach to a highly valuable sector. For UATP, the integration boosts its own BNPL capabilities and connections at a time when the payment method is enjoying considerable global uptake.
Zach Ornelas, SVP of Global Sales for UATP, added: “BNPL is an essential payment option for travel merchants to provide their customers. It offers flexibility and convenience to encourage travellers to complete transactions and boost conversion rates.
“But to reap the full benefits of having this payment option, merchants need a BNPL partner that their customers know and trust. Klarna is that partner.”
