AI-powered payment network Klarna has partnered with cloud-based accounting software provider Xero to launch a new service that enables small businesses to accept and receive 'buy now, pay later' (BNPL) payments.

The collaboration allows Xero’s users to offer Klarna’s payment plans, providing a more convenient and affordable way for their clients to make purchases and complete payments.

This initiative aims to offer Xero’s clients an alternative to credit cards, allowing them to receive upfront payments for their services, while consumers avoid high interest rates and hidden fees.

Klarna’s system verifies a consumer’s eligibility before approving each purchase and provides a clear instalment plan with reminders to help shoppers stay on top of their payments.

According to data from Klarna, these measures result in 99% of lending being repaid, with 40% of orders repaid early.

Bharathi Ramavarjula, Senior Vice President of Payments & Ecosystem at Xero, stated that enabling customers with more payment options, including Klarna, can help them retain customers and increase their revenue.

“We know that maintaining a healthy cash flow is critical to a successful business, and offering more ways to pay supports increased business growth and getting paid faster. By enabling our customers with more ways to pay, including Klarna, we can help them retain customers and increase their revenue.”

David Sykes, Chief Commercial Officer at Klarna, highlighted how Klarna’s flexible payment options have expanded over the past years, moving beyond the firm’s traditional association with clothing and footwear shopping. Klarna’s payment options are now available to micro businesses of all kinds.

“This includes businesses where gardeners and landscaping services using Xero can now offer a Klarna BNPL payment option. Plumbers and heating engineers using Xero can fix their customers’ boilers and let them spread the cost, while small businesses in the construction industry can spread the cost of smaller projects over three interest-free instalments.”

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