Klarna is a popular POS financing platform that serves almost 150 million shoppers globally and handles around 2 million transactions daily. They offer popular financing programs like buy now, pay later (BNPL), credit cards, and consumer loans, all with a convenient application presented at checkout. Not only do they directly serve consumers, but they also have over 400 thousand retail partners that use their platform to offer financing.

As a massive name in the BNPL space, the brand recognition that Klarna has garnered has helped move the entire industry forward. As one of the first innovators in the BNPL space, they have set many of the standards that we know of today and helped shape the landscape of POS financing, including the growing involvement of big banks.

To better understand the new innovations in the BNPL space, we will go over the following:

• Klarna’s beginnings
• The growth of POS financing
• The entry of big banks

And then discuss some different but just as powerful apps like Klarna.

Klarna’s Beginnings

Klarna was one of the earliest BNPL service providers in the world. While they only started operating in the US in 2015, they began in Sweden in 2005 and got their first influx of venture capital funding in 2007. Their products quickly gained popularity, and their growth eventually led to them being one of the biggest POS financing providers in the game.

In terms of POS financing, their business model was both a lender and a fintech. This means that they not only created the software platform that made financing easier to obtain, but they also provided the funds. This all-in-one framework was necessary in the early days, as big banks weren’t yet convinced of the value these fintech companies offered.

The Growth of POS Financing and Apps Like Klarna

As the early innovators like Klarna gained steam, more alternative lenders who developed apps like Klarna began to follow suit. Many of the common names in BNPL started around this time, a few even predate Klarna. 

Here are a few of the firms that consumers will probably recognize:

• Affirm
• Afterpay
• Zip

Additionally, a few recognizable names in fintech saw the writing on the wall and jumped into the game as well, like PayPal and Square.

Over time, all the way through to the last couple of years, BNPL and POS financing saw tremendous growth. As of now, the ability to obtain financing at checkout is essentially an expectation from consumers, and firms that work with a fintech company to offer it see substantial gains in both conversion rate and average ticket size.

The Entry of the Big Banks

These apps, like Klarna and Affirm, caused an absolute explosion in the financial industry through the pandemic. By the end of 2021, about 56% of consumers had used a BNPL service. As a result of this obvious massive demand, banks have started to want in on POS financing. This has been a huge development since banks have an obvious advantage in terms of funding volume, compliance framework, and a library of financial products. 

Their only issue is the lack of innovation on the software front. This is where financing platforms developed by non-lender fintech firms come in to save the day. Skeps is one of these fintech firms, and what we do is connect lenders and merchants. The perfect partnership is formed between the bank's lending power and the unmatched software quality of a firm that can focus solely on creating the best possible app.

The benefits of fintech companies like ours include:

• Next-level software quality.
• No massive time sink for banks to create their own platform.
• Omnichannel compatibility to work with as many merchants as possible.
• Maintenance and bug fixes handled by the third party.

How Skeps Moves the Industry Forward

If alternative lenders were the catalysts for BNPL, fintech firms that specialize in software and can work with multiple different lenders are the incubators for its continued growth. 

Skeps offers the only true end-to-end platform, with a feature set unparralleled by any of our competitors. As a result, the fastest and most cost-efficient way for lenders to enter the BNPL market is a strategic partnership with us. Lenders utilizing our platform will be equipped with faster approvals, true omnichannel integration, one-click applications, premium data security, and analytics in a white-label package, putting you ahead of your competition.