Visa Throws Investment Weight into Klarna

Klarna, a Swedish fintech operation that recently got started, offers an unusual look at the mobile payments field. One sufficiently unusual, in fact, to draw attention from Visa, who moved to land an equity stake in the firm. Klarna’s approach has allowed it to take fully 10 percent of the e-commerce market in Northern Europe, and ultimately, make it an attractive proposition.

What really distinguishes Klarna from the rest of the field is its “after-delivery payment” concept, which allows its users to first receive, and then pay for, goods online. Klarna takes on the risks of fraud and potential bad credit, which allows retailers to carry on with such a scheme effectively. It’s worked well so far, as Klarna has over 70,000 merchants to its credit so far, including major names like Samsung, Disney and Spotify.

While the exact numbers of Visa’s equity stake weren’t disclosed, it seems to be part of a larger plan of attack on Visa’s part, as the company has laid investment in a variety of fintech operations ranging from Square to Stripe to LoopPay. There was even an agreement with PayPal to better operate in the Asia-Pacific field, which showed the extent of Visa’s plans to develop new partnerships.

Such a service would actually be pretty impressive all the way around; what if Visa took a page out of Klarna’s book and held payment for a couple days until after receipt? Product returns would be a lot easier, that’s for sure, and would likely mean more people take more chances on purchases. Plus, product satisfaction would likely improve as well, as poor quality goods were promptly returned with little hassle.

Of course, Visa could also be making this investment as a means to get a share of the Western Europe mobile payments market in general; even Visa noted that 12 percent of the region’s online sales would come from mobile devices by 2021, and there’s little doubt that Visa would want a piece of that 12 percent.

Whether it’s a means to bring temporarily free and easily returned goods to shoppers or as a means to take a chunk of the online shopping market in Western Europe—or even both—isn’t exactly clear. It’s a safe bet, though, that Visa just made one very good investment.