By Jens Hansegard
STOCKHOLM--Sweden's Klarna AB will spend more than $100 million
over the next three years as it kicks off its U.S. online payments
business.
Klarna, which provides retailers with a mobile payments
solution, makes most of its money by charging the merchants fees.
However it also gets income from underwriting risk for online
merchants and by offering their customers credit products, such as
installment plans.
Unlike other tech startups, which tend to prefer working out of
Silicon Valley or New York, the Swedish company has decided to set
up shop in Columbus, Ohio.
"Columbus is at the heart of U.S. e-commerce activity and is the
perfect launchpad for our expansion," said Brian Billingsley, chief
executive for Klarna North America.
The company will launch in the U.S. after Christmas and will add
another office in New York in the near future. In September it said
that it expects to launch with five to 10 merchants signed up for
the service.
Klarna has already begun working with U.S. merchants on the
European market, such as mobile-shopping app wish.com.
Klarna, which numbers more than a thousand employees serving
customers in markets such as the U.K. and Germany, will operate
with a staff of around 20 in the U.S. But the company expects to
have more than a hundred employees in a couple of years.
In the U.S., Klarna will face many other players vying to grab
market share in online and mobile payments, including Amazon.com
Inc. and Stripe Inc. The biggest competitor, however, is eBay
subsidiary PayPal, which is the default payment option on millions
of U.S. websites. PayPal posted revenue of some $7 billion last
year, compared with Klarna's $219.1 million in 2013. eBay plans to
spin off PayPal business into a separate publicly traded company
next year.
In a funding deal last year, the Swedish company was valued at
$1.4 billion, and Sequoia Capital, whose previous investments
includes early stakes in Apple and Google Inc., is Klarna's largest
outside backer. So far, Klarna has received almost $300 million in
outside backing and has said that it doesn't have to raise more
capital for its U.S. launch although it may seek more funding as it
ramps up its U.S. operations.
Write to Jens Hansegard at jens.hansegard@wsj.com
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