In August 2019 it was announced that Commonwealth Bank of Australia (CBA) had made a $100m investment for a 2% stake in Klarna, the Swedish payment solution and digital banking provider.
Under the agreement, CBA will be Klarna’s exclusive partner in Australia and New Zealand. While no further details were released on what services they intend to introduce to the two countries, we believe CBA made the investment with a focus on payment solutions. The services Klarna offers should open up the mobile payments space in Australia and New Zealand, which many providers have failed to crack.
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The mobile payment environment in Australia and New Zealand has remained quite dormant, even as markets around the region advance in this area. All of the major banks in Australia and New Zealand – as well as mobile carriers and internet companies – have tried to enter this space. But as per GlobalData’s 2019 Consumer Banking and Payments Survey, just 34.8% of consumers have a mobile wallet. Even worse, only 12.8% use their mobile wallet; the remaining 22.0% have one but do not use it.
CBA released its first mobile wallet Kaching in 2013, which has since been merged into the CommBank mobile banking app. Yet adoption has been slow. Even the availability of mobile payment services from Apple, Samsung, and Google has had little impact.
This is because the mobile wallets introduced in Australia and New Zealand have not offered enough differentiation from traditional payment cards. Consumers clearly want something more. Klarna offers a hybrid debit and credit card solution linked to a transaction account, providing functionality beyond just payments. It allows users to track items they have purchased, manage returns, and even communicate with customer services.
As the largest banking services provider in Australia and New Zealand, CBA felt it had to look elsewhere for a proven mobile payments success story to replicate in its domestic markets. This search led it to Klarna. The exact services Klarna will offer in Australia and New Zealand remain to be seen. However, the Swedish provider has stated it has no interest in the consumer lending and credit spaces in Australia and New Zealand. Instead, Klarna will introduce an offering that might just kick-start the countries’ mobile payments spaces.
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By GlobalData
