Klarna and Xero have teamed up to enable users of Xero’s small business platform to offer their customers a buy now, pay later (BNPL) option.
The option allows small businesses to get paid up front and customers to pay in installments without high interest rates or fees, the companies said in a press release on Wednesday (Sept. 25). The BNPL option is not available to Xero customers in Australia.
“We know that maintaining healthy cash flow is critical to business success, and offering more ways to pay helps businesses grow and get paid faster,” Bharati Ramavarjula, senior vice president of payments and ecosystem at Zero, said in the release.
According to the release, Klarna verifies consumers’ eligibility before approving a purchase and offers clear installment plans, resulting in 99% of loans being repaid and 40% of orders being paid off early.
Klarna’s chief commercial officer, David Sykes, said in a release that through the partnership with Xero, Klarna’s flexible payment options will be available to small businesses of all kinds.
“This includes businesses like gardeners and landscaping services that use Xero being able to offer the Klarna BNPL payment option, plumbers and heating engineers that use Xero being able to repair customers’ boilers and spread the cost across, and small businesses in the construction industry being able to spread the cost of small projects over three interest-free instalments,” Mr Sykes said.
According to a PYMNTS report, “Redefining Retail: Consumer Finance Trends Driving the Evolution of Pay Later Plans,” BNPL options are especially likely to be adopted by consumers who are struggling to make ends meet.
The report found that 26% of consumers who are struggling to pay their bills and living payday said they were very or extremely likely to use BNPL in the next 12 months, as did 21% of consumers who are not struggling to pay their bills but are living payday.
Xero’s collaboration with Klarna is the latest in a series of partnerships that have added capabilities to the company’s small business platform: Xero has also partnered with BILL to enhance accounts payable (AP) capabilities for US customers, with Quadient to add intelligent AP automation, and with Flinks to enhance banking data access for US and Canadian small businesses.
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Read more: B2B, B2B payments, BNPL, Pay later, Commercial payments, Klarna, News, Partnerships, PYMNTS News, Small Business, Featured News, Featured B2B News, Xero
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