Macy’s invests in point-of-sale lender Klarna, announces five-year partnership

Retailer Macy’s is putting a lot of eggs in its “buy now, pay later,” basket, with an undisclosed investment in point-of-sale lender Klarna and a five-year partnership that will allow Macy’s customers to pay for goods in interest-free installments.

Why should we care?
Retailers are jumping on the point-of-sale loan bandwagon, as consumers shun credit cards. It appears that Macy’s wants to leverage the tool to drive up transactions and increase purchase amounts. Macy’s is following other large consumer brands in integrating Klarna’s solution. Checkout loans have seen strong growth among other nonbank digital lenders like Affirm, Afterpay, and Splitit. Banks are also interested in them, including Citizens Bank -- Apple’s iPhone financing partner -- which says it’s seeing strong interest. While “buy now, pay later” tools add consumer flexibility, the model has yet to be tested against the fallout of an economic crisis. For Macy’s, the benefits potentially outweigh the risks. “[The Klarna relationship] will help us reach wider audiences looking for seamless alternative payment solutions,” Matt Baer, Macy’s chief digital officer, said in a statement.