Affirm’s Shares Take a Hit as Walmart Chooses Klarna for Buy Now, Pay Later Loans
In a significant blow to Affirm (AFRM), shares of the buy now, pay later (BNPL) financing company took a tumble Monday morning following the news that Walmart (WMT) has selected rival Klarna as its exclusive provider for BNPL loans. This partnership marks a major win for Klarna as it gears up for its upcoming initial public offering (IPO) in the US.
Impact on Affirm
The partnership between Walmart and Klarna is expected to significantly impact Affirm’s business, as the retail giant is one of the largest customers for Affirm’s BNPL services. According to recent reports, Walmart accounted for approximately 10% of Affirm’s total revenue in Q3 2021. With Klarna now in the picture, Affirm stands to lose a substantial portion of its business.
Moreover, the partnership could lead to a decrease in merchant acquisitions for Affirm, as other large retailers may follow Walmart’s lead and opt for Klarna’s services instead. This could potentially affect Affirm’s growth prospects and market share in the competitive BNPL space.
Impact on Consumers
For consumers, the partnership between Walmart and Klarna could lead to more choices and flexibility when it comes to BNPL options. Klarna is known for its “smoother checkout experience,” which could encourage more consumers to use BNPL services, ultimately increasing competition in the space and potentially driving down prices and improving consumer experiences.
Impact on the World
The partnership between Walmart and Klarna is a clear indication of the growing popularity and acceptance of BNPL services. With more retailers offering BNPL options, it is becoming an increasingly mainstream payment method, particularly among younger generations. This trend is expected to continue, with estimates suggesting that the global BNPL market could reach $1.5 trillion by 2025.
Furthermore, the partnership could lead to increased competition between BNPL providers, resulting in better deals and more flexible payment options for consumers. It could also encourage traditional financial institutions to offer similar services, further expanding the market and making BNPL a more accessible and convenient payment method for a larger population.
Conclusion
The partnership between Walmart and Klarna is a significant development in the world of buy now, pay later financing. The loss of a major customer for Affirm is undoubtedly a setback, but it also highlights the growing popularity and competition in the BNPL space. For consumers, the partnership could result in more choices and flexibility, ultimately leading to better deals and improved payment experiences. As the BNPL market continues to evolve, it is essential to stay informed and make informed decisions when it comes to using these services.
- Affirm loses a significant customer in Walmart
- Klarna gains a major win in the lead up to its IPO
- Increased competition in the BNPL space
- More choices and flexibility for consumers
- Continued growth and acceptance of BNPL services
