Swedish fintech company Klarna has announced the sale of its checkout business for $520 million, signaling a shift away from direct competition with payment giants like Stripe and Adyen, Bloomberg reported. This decision is part of the efforts to streamline operations and strengthen alliances within the fintech industry.

Addressing Conflict of Interest

Klarna's decision to divest its checkout business is reportedly part of a realignment aimed at reducing conflicts of interest with key competitors in the payment service provider (PSP) space. The checkout unit, which allowed merchants to directly integrate Klarna's payment options, positioned the firm as both a partner and competitor to platforms like Stripe and Adyen.

Under the new ownership, the checkout business will operate as a standalone entity, retaining key Klarna personnel to ensure continuity and facilitate a smooth transition. Alexander Olsson, Jesper Eriksson, Rasmus Fahlander, and Erik Gustafson will reportedly move to the new entity to ensure a seamless knowledge transfer and expertise.

The deal comprises a mix of equity and debt financing, performance-based incentives, and revenue-sharing agreements. It is designed to align interests and support ongoing operational success for the divested entity. This financial structure aims to provide stability and growth opportunities for the checkout business under its new ownership.

By selling the business to an investor consortium led by Kamjar Hajabdolahi, Klarna aims to refocus its efforts on collaborative partnerships rather than direct market competition. While Klarna's checkout business has been a profitable venture, particularly in the European market, the company's leadership under Sebastian Siemiatkowski has increasingly emphasized cooperation with PSPs since 2021.

A Shift in Strategy

This shift highlights Klarna's strategy to enhance distribution channels and streamline its relationship with all partners involved in facilitating its payment solutions. The move is expected to simplify Klarna's operational structure and reinforce its standing within the fintech ecosystem.

Early this year, Klarna engaged investment banks for a US IPO at a valuation of $20 billion. The firm is reportedly targeting public listing as soon as the third quarter of 2024. Klarna was valued at $45.6 billion in 2021. However, the valuation later tumbled to $6.7 billion due to high interest rates.