Klarna Teams With Xero on BNPL for Small and Microbusinesses

Klarna and Xero partnered to enable the users of Xero’s small business platform to offer their customers a buy now, pay later (BNPL) option.

With this option, small businesses can get paid up front while their customers can pay over time without high interest rates or fees, the companies said in a Wednesday (Sept. 25) press release. The BNPL option is not available to Xero’s customers in Australia.

“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,” Bharathi Ramavarjula, senior vice president of payments and ecosystem at Xero, said in the release.

Because Klarna checks a consumer’s eligibility before approving a purchase and provides a clear installment plan, 99% of lending is repaid and 40% of orders are repaid early, according to the release.

Through the partnership with Xero, Klarna’s flexible payment options are available to micro businesses of all kinds, Klarna Chief Commercial Officer David Sykes said in the release.

“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 involved in the construction industry could spread the cost of smaller projects over three interest-free installments,” Sykes said.

BNPL options are especially likely to be adopted by consumers struggling to make ends meet, according to the PYMNTS report “Redefining Retail: Consumer Finance Trends Driving the Evolution of Pay Later Plans.”

Twenty-six percent of consumers who live paycheck to paycheck with difficulties paying their bills said they were very or extremely likely to use BNPL in the next 12 months, as did 21% of those living paycheck to paycheck without difficulties paying their bills, the report found.

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 also teamed up with BILL to enhance its accounts payable (AP) capabilities for U.S. customers, with Quadient to add intelligent AP automation, and with Flinks to enhance banking data access for small businesses in the United States and Canada.

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