Visa surprised the European fintech industry last year when it announced it would acquire Tink for 1.8 billion euros ($2.15 billion at the time of the deal). Klarna now wants to compete directly with Tink with a new business unit that has its own brand – Klarna Kosma.
Like Tink, Klarna offers an open banking application programming interface (API) with Klarna Kosma. Tink and Klarna are also headquartered in Stockholm, Sweden. There are other open banking API companies, such as TrueLayer and Plaid. And it’s been a competitive space because Visa also tried to acquire Plaid, but that deal fell through.
With this new strategy, Klarna is essentially saying it’s open for business. If you are building a financial product and need to interact with bank accounts, you have another option.
Klarna Kosma is an API that other companies can integrate into their apps and services. These businesses can leverage Klarna’s API to access account statements, initiate payments, retrieve banking information, and update this data regularly.
Klarna is best known for its “buy now, pay later” products. In some countries, Klarna allows customers to log into their bank account to preview spending and establish a sort of credit score before allowing customers to buy something in installments. With today’s move, Klarna is opening up its in-house product to other customers.
“With Kosma, we are opening up the power of our proprietary Open Banking platform and technology to banks, merchants and fintechs who share our dream of a world where consumers own their data and banks are empowered. compete for customers by delivering value, not locking in data,” Klarna CTO Yaron Shaer said in a statement.
In Europe, banks and financial institutions must all offer open banking interfaces due to the European Payment Services Directive PSD2. But there is no single standard. Open banking APIs do the heavy lifting for you.
Klarna said it covered 15,000 banks in 24 countries. So far, the API is primarily focused on European and US banks, but plans to expand to other markets soon, such as Australia, Canada and New Zealand.
In addition to the Account Information Service (AIS), Klarna Kosma customers can also programmatically initiate payments with compatible banks. This has always been the long-term promise of open banking. If payment initiation takes off, it could replace card payments or e-wallets like PayPal. We’re not there yet, but Klarna really wants to have a product ready if we get there.