Swedish online payments startup Klarna has acquired German rival Sofort, which it claims will give it a 10 percent slice of Europe's $100bn web payments market.
Klarna is one of the most successful Swedish startups but one which few outside of Scandinavia know of. The Sofort deal is its first major acquisition, and should give it a leg up in Germany — where it already operates — and a path to other major European markets outside of Scandinavia.
As a payments company, Klarna's main proposition for consumers is that it allows them to pay for goods purchased from online merchants after they receive them. In effect, it offers short-term credit, handles credit risk assessments and guarantees payment to the merchant.
Consumers that don't pay within a set period are slugged with a roughly $10 late fee, and Klarna picks up a commission from sellers on payments. It's also built a name for itself for having developed complex antifraud and risk analysis systems that monitor both consumers and merchants.
The Stockholm-based company currently operates in Sweden, Denmark, Norway, Finland, the Netherlands, Austria, and Germany, but with Sofort onboard, it will expand to 14 European countries. Besides Germany, Sofort operates in Switzerland, the Netherlands, the UK, Belgium, France, Italy, Poland, Spain, and Hungary.
According to Klarna, the combined group will have 25 million users, 43,000 online merchants and more than half of all German online merchants. Sofort claims to have 25,000 online merchants. Klarna plans to operate both brands independently for now.
Klarna is acquiring Sofort from its majority shareholder Reiman Investors, with the transaction subject to Sweden's financial regulator.