Klarna's crypto and shopping moves; EMV for agentic payments

• Key insights: Klarna has issued a stablecoin and extended its gift card scale.  
• What's at stake: The Swedish financial institution is looking to build a market in the U.S. following its IPO. 
• Forward look: Hundreds of banks and non-banks are either issuing a stablecoin or considering a coin. 

Following its U.S. IPO, Klarna has accelerated its pitch to consumers and investors by tapping into the buzz around stablecoins and the holiday shopping season.

The Sweden-based Klarna, which is best known in the U.S. as a buy now/pay later lender, has debuted KlarnaUSD, an effort to tap a stablecoin payments market that is expected to pass $27 trillion in yearly volume by 2027, according to McKinsey.KlarnaUSD launched on Tempo, a Stripe and Paradigm managed blockchain that's designed for payments. Klarna argues that stablecoins can cut costs from cross-border payments. 

"With Klarna's scale and Tempo's infrastructure, we can challenge old networks and make payments faster and cheaper for everyone," Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in a release. "Crypto is finally at a stage where it is fast, low-cost, secure and built for scale. This is the beginning of Klarna in crypto."

While dozens of banks are considering stablecoins, non-banks are still the primary issuers. But there is demand. Forty-seven percent of respondents said that their institution's clients were asking for general information about stablecoins and other digital assets, according to American Banker research, noting 35% said clients are asking for the ability to make payments using cryptocurrencies. Twenty-seven percent said that customers were asking for institutionally provided custody of digital assets.

Klarna is also expanding its gift card program amid signs consumer spending is holding up despite tariffs and inflation. Klarna has expanded its partnership with Blackhawk Network to add more merchants and retail brands. Consumers can use Klarna to buy gift cards from more than 350 brands that are available on Giftcards.com. Additionally, brands that use Blackhawk's gifting platform can offer Klarna as a payment option–including buy now/pay later and other options. 

"As we continue to grow rapidly in the U.S., this expanded partnership with [Blackhawk Network] gives millions of consumers even more flexibility and control over how they buy and give gifts," said David Sykes, chief commercial officer at Klarna, in a release. Klarna has added to its range of financial services as it expands in the U.S., facing competition from Afterpay, Affirm and other companies that offer installment payments. In a research note, JPMorganChase said it anticipates a "steep acceleration" in Klarna's fourth quarter payments volume despite some industrywide concerns about labor market weakness in the U.S. 

Anton Gvozdikov - stock.adobe.com

EMVCo examining agentic payments

As more banks and payment companies adopt agentic artificial intelligence, efforts are underway to ensure the emerging technology fits with existing processing protocols.EMVCo, which manages the EMV standards that support card payments in dozens of countries, is working on how the specifications can support agentic payments. 

EMVCo is determining how EMV's security and authorization specifications, such as EMV 3-D Secure, EMV Payment Tokenization and EMV Secure Remote Commerce, can be upgraded to manage seamless and secure card-based agentic payments, EMVCo said. ("Tokenization" in this case does not refer to cryptocurrency, but to replacing card numbers with temporary one-off values to prevent use after potential theft).

EMVCo is engaging with the hundreds of industry stakeholders that contribute to the EMV standards; and is also meeting with global technical bodies and associations to identify and evaluate opportunities for collaboration. 

"EMVCo developed the global specifications that enable trusted card-based payments for billions of consumers and businesses worldwide. There is now a clear opportunity to collaborate with participants across the industry to extend this experience to support agentic payment solutions," Patrik Smets, EMVCo executive committee chair, said in a release.

WILL BURGESS/BLOOMBERG NEWS

Australian incentive marketer plots U.S. move

Wilson Asset Management, Torney Group and Ophir have invested $28 million Pay.com.au, a platform that supports rewards and loyalty programs for airlines such as Quantas, Singapore Airlines and Virgin Airlines; and card networks including Visa, American Express and Mastercard. 

The platform, which launched in 2019, has processed more than $10 billion USD in business payments, mostly for small businesses in Australia. The new funding will fuel improvements that will support an expansion in the U.S., where it is partnering with Amex and other payment companies to offer incentive marketing for business travelers. 

"As we refine our core product, grow our footprint and build stronger strategic partnerships, we are continuing to shape a strong business loyalty ecosystem for the Australian SME community," Edward Alder, managing director at pay.com.au, said in a release. Banks and payment companies are boosting investments in travel, partly as a way to build a user base for new payment technology such as agentic commerce. 

Nathan Laine/Bloomberg

Visa expands stablecoin settlement in CEMEA

As it adds technology to support stablecoins, Visa is also extending its ability to reach clients globally. 

Visa has partnered with digital asset platform Aquanow to support stablecoin settlement in Central and Eastern Europe, the Middle East and Africa. Aquanow will combine its digital asset infrastructure with Visa's payment technology, extending stablecoin support to Visa's network of issuers and merchant acquirers in the region. 

 "Our partnership with Aquanow is another key step in modernizing the back-end rails of payments, reducing reliance on traditional systems with multiple intermediaries, and preparing institutions for the future of money movement," said Godfrey Sullivan, head of product and solutions for CEMEA at Visa, in a release. 

Visa began settling stablecoin transactions in 2023 with monthly volume recently passing a $2.5 billion annualized run rate, according to the card network. 

Swiss banks embrace data sharing A consortium of eight Swiss banks and two third party providers are the initial adopters of an open banking program from SIX, the country's stock exchange. SIX operates bLink, an open banking platform that uses a standardized application programming interface to power permission-based data sharing. This enables customers to use their bank account to access service from third parties such as fintechs. SIX anticipates more banks will adopt open banking, noting possible applications currently include account overviews, spending analyses, and budget planners. 

Switzerland is behind the curve in adopting bank data sharing. Open banking has taken hold in much of the world as demand has grown among consumers for wider and easier access for services outside of their bank accounts.   

"Open banking is gaining momentum in Switzerland. With today's launch of multibanking, a concrete use case for private customers goes live," Christoph Müller, head of banking services and executive board member of SIX, said in a release. 

Kiyoshi Ota/Bloomberg

Wise cuts out third parties in Japan

Wise has directly connected to the Bank of Japan, which enables the London-based payment firm to execute transactions without bank partnerships. This supports near instant settlement, according to Wise. It also feeds a major part of Wise's strategy, which relies on connections to local partners to reduce the number of steps required to process payments.

Seventy four percent of Wise's transfers arrive in less than 20 seconds through these local connections, according to Wise, adding this is up from 33% in 2020.

Wise, which has similar partnerships in Europe, Asia and Latin America, is also planning a U.S. IPO, a move that includes adding staff to its Austin office and adding partners to boost its distribution. 

Ana Maria Arevalo Gosen/Bloomberg

Mastercard approaches beauty retailers in Latin America

Mastercard has partnered with L'Oreal to launch a business credit card designed for salons and beauty parlors.

Mexico is the initial market, though the card network plans to offer the card in other Latin American and Caribbean markets. While it's pursuing a distinct niche, Mastercard says there is a large market. There are more than 350,000 salons in Latin America and the Carribean, according to Stylist Associations. Most of these salons use cash.

Mastercard estimates more than 90% of all small businesses in the region are cash-only, creating an opportunity for new payment flows.Other payment companies, such as Block, have also found demand among beauty salons, mixing digital checkout with other functions such as appointment booking, staff scheduling and inventory management. 

Hollie Adams/Bloomberg

Checkout.com plugs into agentic protocol

Banks and payment companies that are worried about the all-digital nature of agentic AI are signing onto agentic AI standards that are designed to manage identity and other security for transactions that involve very little human interaction, if any. 

Checkout.com, which is building tools for agentic commerce, says it will support the Agentic Commerce Protocol (ACP), a Stripe/Open AI-managed model that shoppers, merchants and processors can use to guide transactions. 

This will enable Checkout.com's merchants to offer checkout inside platforms including OpenAI's Instant Checkout. "Agentic commerce marks the next chapter of digital commerce, and demands a different approach," Meron Colbeci, chief product officer at Checkout.com, said in a release. The London-based Checkout.com is also seeking regulatory approval in the U.S. to expand its payment processing business.