International buy now, pay later juggernaut Klarna says its Australian customer base has grown to more than half a million users since it launched one year ago.
Backed by the Commonwealth Bank to take on local giant Afterpay, the Swedish payments provider has revealed close to 575,000 Australian consumers are actively using the platform across 400 retailers.
Head of Klarna Australia, Fran Ereira, said the company would enter its second year with greater momentum, flagging a number of major retailers were in the process of implementing its payment technology.
“We enter 2021 with strong momentum, have signed a variety of great retailers and have a highly engaged and growing consumer network,” Ms Ereira said.
“We’re confident we bring something really different to the Australian market — Klarna gives more inspiration and value to shoppers and greater engagement to retailers.”
Australia’s booming buy now, pay later industry has been fuelled by the rise of local players such as Afterpay and Zip, which offer zero-interest lending for goods and services paid back via instalments.
The payment method is heavily targeted towards younger people who are turning their backs on interest-bearing credit cards.
CBA lured Klarna to Australian shores in order to compete with the local players through a $300 million investment, which equates roughly to a 5.5 per cent stake in the Swedish fintech.
Klarna is also Afterpay’s major US and UK competitor, which are both key growth markets for the Australian-based provider.
Afterpay has roughly 3.4 million active customers in Australia, while Zip has a customer base of 2.5 million.
Klarna is expected to provide a further update on its operations at CBA’s X15 tech briefing expected to be held on Thursday.
The buy now, pay later industry has come under scrutiny over late fees and not conducting adequate credit checks before allowing a customer to use the service.
A regulation debate has also been sparked as the industry currently falls outside of Australia’s credit and lending laws.
Operators are, however, subject to the Australian Securities and Investments Commission’s product intervention powers.
Ms Ereira said Klarna would play a leadership role in ensuring the industry was promoting lending products that did not cause financial harm to Australian consumers.
“We’re also committed to playing a leadership role in our sector through a meticulous approach to delivering safe and sustainable products to our customers,” she said.
The Australian Financial Industry Association has established a buy now, pay later code of conduct for operators working within the country. The code is only applicable to AFIA members.