Klarna has entered into a lucrative partnership with Walmart's fintech arm, OnePay, to provide flexible loan options to Walmart customers both in-store and online. With a pre-money valuation of $2.5 billion, OnePay stands as an influential player in the financial technology landscape, backed by heavyweights Walmart and Ribbit Capital. This strategic alliance positions Klarna to extend its reach by making underwriting decisions for loans that range from 3 to 36 months, with annual interest rates between 10% and 36%.
OnePay was launched two years ago and has since amassed over 3 million active customers. As the exclusive provider of buy now, pay later loans for Walmart, OnePay handles the user experience via its app, offering a seamless process for consumers. With Walmart's vast customer base of 255 million weekly shoppers, OnePay enjoys a significant advantage in acquiring new users, further solidifying its market position.
However, OnePay's journey hasn't been without challenges. The company's shares have experienced an 18% dip this year, reflecting a fluctuating stock market performance since its initial public offering in 2021. Despite these hurdles, OnePay continues to generate impressive revenue at an annual run rate exceeding $200 million.
Max Levchin, a co-founder of PayPal, leads OnePay as CEO. Under his guidance, the company has rolled out a suite of financial products tailored to Walmart customers, enhancing their shopping experience through innovative payment solutions. This new partnership with Klarna is set to further enrich OnePay's offerings and potentially elevate its standing in the fintech sector.
Klarna's role in this collaboration involves making critical underwriting decisions for loan applications, ensuring customers receive tailored financial solutions. With loan terms extending up to three years and competitive interest rates, this partnership aims to provide Walmart shoppers with more flexible payment options.
The partnership also opens avenues for future innovations. As John David Rainey, Walmart CFO, expressed optimism about the collaboration:
"We're looking forward to going down this new path where not only can they provide installment credit… but also revolving credit."
This statement hints at potential developments like a OnePay-branded credit card, which could be realized with assistance from a new banking partner. Such advancements would further diversify OnePay's financial services portfolio.
While Klarna prepares to make its initial public offering (IPO), this collaboration underscores its strategic efforts to expand its footprint in the competitive fintech market. By aligning with Walmart's OnePay, Klarna gains access to a vast consumer base and a well-established financial infrastructure.