Nearly one million businesses will soon be able to offer buy now, pay later (BNPL) services to part of their menu of payment options. JPMorgan Chase’s payments processing unit, the world’s largest merchant acquirer, is partnering with Klarna to bring BNPL plans to its merchants.
The service is set to roll out later this year, allowing some 900,000 businesses that use JPMorgan Payments to offer BNPL financing at the point of sale.
Klarna, which serves 85 million customers globally, has been rapidly expanding in the U.S. Headquartered in Sweden, the company is expected to launch an initial public offering in the U.S. later this year and has also been exploring the possibility of securing an American banking license.
The partnership with JPMorgan marks another milestone for Klarna, as it continues to build partnerships with major processors to become omnipresent at checkouts globally. Last October, Klarna teamed up with Worldpay to make its services automatically available through Worldpay’s merchant infrastructure. It has also entered into similar partnerships with Adyen and Stripe.
“This is all about giving merchants and customers more options at checkout,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research. “The partnership with the largest merchant acquirer in the U.S. extends Klarna’s reach immensely ahead of its IPO.”
Bringing BNPL Under the Chase Umbrella
BNPL services have been growing rapidly in recent years. Last holiday season, BNPL spending topped $18.6 billion, up from $16.6 billion in 2023 and $14.5 billion in 2022. A report from GlobalData predicts that the U.S. BNPL market will expand at an average annual rate of 21% between 2023 and 2028.
JPMorgan has offered its own BNPL option, Chase Pay Over Time, to its credit card holders since 2020. Last year, the banking giant banned customers from using its credit cards to repay outside BNPL services like Klarna or Affirm, citing that it did “not generally allow customers to pay for credit products” with their credit cards, according to a statement given to the New York Times.
Observers noted at the time that this move helped bolster JPMorgan Chase’s investment in its own BNPL product. The partnership with Klarna will accomplish much of the same.
