Etsy Launches Buy Now, Pay Later Capability with Klarna

Need to Know

• Klarna’s buy now, pay later technology is now available to US shoppers on Etsy.
• Buyers will be able to finance Etsy purchases between $50 and $10,000.
• Etsy hosts more than three million sellers and hit 60 million active buyers in August of this year.

Analysis

Online DIY and vintage retail website Etsy is making it easier for shoppers to finance their purchases this holiday season, partnering with Klarna to offer buy now, pay later functionality on its marketplace.

Klarna, which is one of the world’s largest private fintechs, will be bringing its payment tech to Etsy shoppers in the US. Using Klarna, shoppers can choose to finance Etsy purchases between $50 and $10,000 in four equal, interest-free installments. The technology will be initially available just to customers in the United States, but Etsy is aiming to roll out Klarna’s financing functionality to other markets in 2021.

“We’re excited to work with Klarna to expand the number of payment options available to shoppers through Etsy Payments,” Kruti Patel Goyal, Etsy’s Chief Product Officer, said in a statement. “Klarna  will enable shoppers to buy on Etsy with greater financial control and convenience, without additional fees for sellers. We believe this flexible solution will be particularly valuable during the peak holiday shopping period when many shoppers are buying  special items for their loved ones.” 

Etsy currently hosts more than three million merchants, from handcrafted pieces to antiques and vintage decor items and housewares. The online marketplace has fared well during the COVID-19 pandemic, as more shoppers turned towards home furnishings and decor, and away from other categories such as clothing and travel, posting a Q2 revenue of $429 million in August, a 137% increase year over year, and 60 million active shoppers.

With Klarna, Etsy should be able to continue its success, plus appeal to millennial and Generation Z shoppers for whom flexible payment options are attractive. “We are thrilled to grow our relationship with Etsy to make it even easier for their vibrant buyer community to get the items they love,” Sebastian Siemiatkowski, CEO at Klarna, said in a statement. “Not only does this relationship bring new flexible payment options to shoppers globally, we’re proud to work with Etsy, a platform that supports small businesses around the world.”  

Buy now, pay later technology has skyrocketed in popularity during the pandemic, as more businesses seek to satisfy customer demand for flexible financing options, due to ongoing economic uncertainty. In August, payments processor PayPal debuted its own buy now, pay later function, while a number of major retailers have partnered with buy now, pay later fintechs to offer the option to their customers: Target has partnered with Sezzle, for instance, while Macy’s has invested in Klarna on a five-year term. For its part, Klarna has 90 million customers and more than 200,000 partners worldwide and is currently valued at $10.6 billion.