What made Walmart switch from Affirm to Klarna for BNPL loans?

Walmart Inc plans on switching from Affirm to Klarna for “buy now, pay later” loans in 2025.

AFRM shares are down nearly 10% following the revelation from sources that talked to CNBC today on condition of anonymity.

It’s a significant potential hit to Affirm that relies heavily on partnerships to drive an increase in volumes and customer acquisition.  

Including today’s price action, Affirm stock is down close to 90% versus its year-to-date high amidst a tariffs and economic uncertainty driven rout in the US tech stocks.

What made Walmart replace Affirm with Klarna

Walmart may have switched to Klarna for BNPL offerings primarily because the Swedish fintech has a strong global presence compared to Affirm.

Klarna operates in 26 countries, including major markets like US, Canada, Australia, and Europe. In comparison, AFRM is focused mostly on its homeland, Canada, and the United Kingdom.   

This makes Klarna a more appealing partner for Walmart as it seeks to expand its BNPL offerings.

Plus, Klarna enables greater payment flexibility with the likes of “pay later in 30 days” and “pay after delivery” options, which make shopping all the more exciting and convenient for consumers.  

Walmart stock is keeping flat following the Klarna news on Monday.

How else is Klarna better than Affirm for WMT

What may also have contributed to making Walmart replace Affirm with Klarna for BNPL services is the fintech’s team ups with major payment services providers like Worldpay, making it a default payment option for thousands of merchants globally.

This extensive network makes Klarna available to more checkouts, improving its overall appeal for retailers like WMT.

Additionally, Klarna excels in providing a localized shopping experience, including local pricing, domestic returns, and tax calculations, which further makes it attractive for global retailers looking to cater to diverse customer bases.

Finally, the BNPL company offers additional features like shopping assistance and personalised recommendations that Affirm lacks, helping enhance the overall customer experience as well.

Klarna is scheduled for a US IPO in 2025

The Walmart news arrives only days after Klarna filed for initial public offering (IPO) in the US. It hasn’t, however, disclosed the total number of shares it plans on offering or the expected price range yet.

While the Swedish firm has stolen a coveted partnership from Affirm this morning, it has had its own struggles in recent years.  

Klarna attracted exceptional demand during the pandemic that pushed its valuation to a high of $46 billion. But then came its downfall that trimmed its valuation to less than $7.0 billion only in 2022.

Klarna then returned to profitability in 2023 that helped improved the sentiment again. Analysts value the BNPL company at about $15 billion this year. That said, Klarna is one of the most anticipated US IPOs in 2025.