Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Banks

Carney: UK is ‘investment banker for Europe’

The governor of the Bank of England has repeated his calls for a “smooth and orderly” UK exit from the EU, saying that a transition out of the bloc will happen, it was just a case of “when and how”. Responding to the BoE’s latest bank stress tests, where lenders overall emerged with more resilient […]

Continue Reading

Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

Continue Reading

Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

Continue Reading

Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

Continue Reading

Categorized | Financial

Klarna expands online payments business


Posted on December 28, 2014

Klarna, one of the few European technology start-ups valued at more than $1bn, is planning to expand from online shopping into money transfers between individuals and payment systems for newspaper articles and public transport.

Having become a leader in ecommerce payments in Germany, France and Italy, the Swedish company is now launching in the UK and US. Its online shopping payment system has grown in popularity as it allows shoppers to buy more quickly and receive goods before paying for them, while taking on the credit risk for retailers.

    Klarna uses complex algorithms — based, for instance, on the time of day and a customer’s shopping history — to permit one-click purchases and detect fraud.

    In Sweden, about 40 per cent of the 10m population has used Klarna, primarily for online shopping. But Niklas Adalberth, co-founder and deputy chief executive, told the Financial Times that the group was looking to “use our knowledge in ecommerce in new verticals”.

    Klarna already has a deal with Dagens Nyheter, Sweden’s leading newspaper, to make buying individual articles or day passes for its website quicker and simpler. It has also teamed up with SL, which runs public transport in Stockholm, to sell bus, train and metro tickets using one click over a mobile phone.

    Mr Adalberth said other possibilities included providing airlines with simpler ways of selling additional services to passengers.

    “You could receive an SMS [saying] ‘do you want lounge access for SKr29?’” he explained. “They are still missing out on all the upside opportunities — food on flight, business class upgrade.”

    Klarna is also looking into consumer-to-consumer payments and is set to enable buyers to pay other individuals for goods on Tradera, eBay’s Swedish auction website.

    However, it is facing increased competition from an array of companies moving into mobile and online payments, including traditional payment groups such as Visa and MasterCard as well as technology companies such as PayPal and Apple.

    Klarna’s rise has not been without problems either. It faced heavy media scrutiny in Sweden when some customers in the country had problems with receiving and paying online invoices.

    Mr Adalberth said the company had changed its practices and reminded customers by text message when they had an invoice. But he conceded that the eventual payment for goods through Klarna involved “more friction” than the initial purchase on a retailer’s website.

    Klarna is now seeing a surge in mobile use. Mr Adalberth said mobile transactions accounted for almost half of the total, up from a fifth in March.

    He added that Klarna had increased the sales conversion rate — how many completed sales a retailer gets after a customer puts something in their shopping basket — to 50 per cent on mobile devices, from an average of 3 per cent when the company’s services were not used.

    The Swedish group is investing at least $100m in its push into the US as it enters the home turf of larger rivals such as PayPal and Square.