STOCKHOLM, Sweden—Another fintech startup is challenging FIs for their credit card business, but this time the threat isn’t from Silicon Valley, it’s from outside the U.S.
Stockholm-based Klarna, one of Europe’s largest and most valuable financial technology startups, said it has signed a deal to begin offering U.S. credit via WebBank, a Utah bank that also works with LendingClub, PayPal Holdings, and other fintech firms, according to the Wall Street Journal.
The Journal reported that Klarna, valued at $2.5 billion in a 2015 stock sale, directly partners with retailers and is also now available via e-commerce platforms in the U.S. The company gives small loans paid down in installments to people via mobile apps or the web when needed for purchases.
“Our product speaks extremely well to consumers, especially Millennials, in the U.S.,” Klarna CEO Sebastian Siemiatkowski told the Journal. “Revolving debt is not the logical way to do things. And the classic store-card products have never made it work well online.”
According to the Journal report, in the U.S., for purchases over $149, Klarna will start offering 0.99% annual percentage rate credit lines over the first six months, and then 19.99% beyond that if the bill isn’t paid off. It plans to offer other wrinkles, such as initial grace periods, over time.