CommBank will take on Afterpay in buy-now pay-later market

Australia’s largest bank is moving with the times in a financial market where buy-now pay-later (BNPL) companies like Afterpay (ASX: APT) and Zip Co (ASX: Z1P) have gained traction with consumers and investors alike.

In its results announcement today, Commonwealth Bank (ASX: CBA) announced it had signed an agreement with Swedish online financial services company Klarna, a leading global payments provider with more than 60 million customers and 130,000 merchants.

Klarna has customers all over Europe and in the United States, and recorded a revenue of US$627 million in 2018.

Commbank said it had committed an investment of US$100 million into Klarna Holding AB, as part of the group’s US$460 million capital raise that has mostly been pitched to support massive growth in the US, which is rising at an annual rate of six million new consumers.

“We will become Klarna’s exclusive partner in Australia and New Zealand and intend to further invest at the parent and local level to support this partnership,” Commbank said.

In a press release following the equity round that now values Klarna at US$5.5 billion, the European group said it was delighted establish an exclusive partnership for Australia and New Zealand with Australia’s largest retail and commercial bank.

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Source: CommBank will take on Afterpay in buy-now pay-later market