UATP, a leading global payment network that streamlines payment processes for businesses, has announced a strategic partnership with Klarna, an innovative AI-driven payments network. This collaboration will empower airlines to offer Klarna’s flexible payment solutions, including interest-free Buy Now, Pay Later (BNPL) options, giving travelers greater control over their travel expenses.
The partnership between UATP and Klarna marks a significant convergence of two influential players in the payment technology sector, offering mutual benefits. Klarna gains immediate access to UATP’s extensive network of airlines and travel agencies, becoming a preferred BNPL partner across Europe and the Asia-Pacific region. Klarna recognizes the immense growth potential within the $1 trillion air travel industry, where credit cards dominate, accounting for 70% of travel payments. This presents a substantial opportunity to address the significant costs airlines face for payment processing (collectively spending $20 billion annually) and the high interest payments consumers often incur.
Klarna’s BNPL service has demonstrated immense popularity where it is available, with the total value of travel bookings through Klarna increasing by 50% over the past year. For UATP, this partnership strengthens its support for BNPL options, enabling merchants to tap into a burgeoning global BNPL market valued at $14.55 billion in 2024. This market is projected to grow at a compound annual growth rate (CAGR) of 26.50%, reaching $60.47 billion by 2030.
“BNPL is an essential payment option for travel merchants to provide their customers. It offers flexibility and convenience to encourage travelers to complete transactions and boost conversion rates,” says Zach Ornelas, SVP of Global Sales for UATP. “But to reap the full benefits of having this payment option, merchants need a BNPL partner that their customers know and trust. Klarna is that partner.”
Klarna provides consumers with a range of payment options, including immediate payments, short-term interest-free Buy Now, Pay Later (BNPL) services, and long-term financing. Notably, approximately 30% of Klarna’s global transactions are immediate payments. Klarna’s BNPL service offers short-term, interest-free credit with no fees if payments are made on time. Each transaction undergoes careful underwriting based on rigorous eligibility criteria, resulting in a remarkable 99% repayment rate worldwide. This approach provides consumers with a transparent and predictable repayment structure, making it easier to manage their finances without accruing interest.
Through UATP’s established connections and expertise in alternative payments, the partnership between UATP and Klarna enables airlines and other travel merchants in the UATP network to implement BNPL quickly, reducing resource-intensive setup efforts and lowering transaction costs. Simultaneously, Klarna gains immediate access to travel merchants within the UATP network, accelerating its entry into the travel sector and driving growth opportunities in this vertical.
“Travel is perfect for interest-free buy now, pay later, allowing travelers worldwide to spread the cost of their trips and without getting stuck paying sky-high credit card interest rates,” says Erin Jaeger, Head of North America, Klarna. “This agreement with UATP means we can quickly bring these benefits to many more airlines and tap into the huge growth opportunity which the $1 trillion travel industry represents for us.”
The partnership between UATP and Klarna is anticipated to launch in the third quarter of 2024.
