The shares of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are pushing higher on Thursday despite an announcement out of Commonwealth Bank of Australia (ASX: CBA) which reveals that a new competitor is aiming to win market share away from them in the ANZ market.
What did Commonwealth Bank announce?
This morning the banking giant announced the official launch of Klarna Australia.
According to the release, millions of Commonwealth Bank customers will be able to benefit immediately from using one of the world's largest and most innovative buy now pay later online shopping services.
The bank has revealed that customers can now access Klarna through the country's market-leading banking app. This will allow Commonwealth Bank customers to quickly register and begin shopping at any online store.
Purchased items will show up in the CommBank app and customers will also be able to take advantage of price drop and out of stock notifications directly from Klarna.
Klarna will also be available to customers of other banks.
What is Klarna?
Klarna is one of the world's biggest digital payments providers. It has more than 85 million customers using its service to purchase goods and services from 200,000 merchants.
These customer numbers are likely to be given a major boost in the coming months. Commonwealth Bank is the market leader in digital payments, with more than 7 million digitally active customers and 5.6 million customers that use the CommBank app every day.
Commonwealth Bank's Chief Executive Officer, Matt Comyn, said: "Our partnership with Klarna will further enhance the customer experience in our leading banking app and address the rapidly growing demand among consumers for new payment options. In particular, it allows us to build on our leading technology to deliver the very best payment services for our customers and merchants in Australia, on platforms which are safe, secure, and easy to use."
"By partnering with Klarna, we are bringing together our market leading digital technology, merchant relationships and strong customer network with Klarna's innovative payments technology and integrated shopping experience for the benefit of CBA customers and many more Australian consumers."
Commonwealth Bank increases its investment in Klarna.
The bank also advised that it has followed up its initial investment of US$100 million, with a further US$200 million investment in Klarna at the same valuation.
This increases their strategic alignment, brings additional rights, and gives the bank exposure to Klarna's international growth.
The US$300 million total investment brings its shareholding in Klarna to 5.5% from its initial 1.8% stake.
The two parties will jointly fund and have 50:50 ownership rights to Klarna's Australian and New Zealand business. Commonwealth Bank also retains a right to partner with Klarna in Indonesia.
