(Bloomberg) —
Revolut Ltd.’s hard-charging boss Nikolay Storonsky has his eyes on the booming “Buy Now, Pay Later” industry as he plans to compete with Swedish startup Klarna.
“Which company would I like to buy? For any budget?” the British fintech’s chief executive officer said in an onstage interview with Bloomberg News at this week’s AI Summit in London. “Maybe I would buy Klarna, it’s a great business.”
While Storonsky was only indulging in some lighthearted fantasy M&A, his intentions toward the so-called BNPL market are serious: He said Revolut was likely to launch a product to rival Klarna in Europe next year.
Revolut, which started off as a money-transfer service and has ambitions to become a “super app” for banking and trading products, snagged a $33 billion valuation from investors this year. But Klarna went one better, securing a $45.6 billion value on the back of its popularity with Millennial and Gen Z shoppers. SoftBank’s Vision Fund 2 was a lead investor on both companies’ funding rounds.
Once a niche form of credit, the use of BNPL grew during the pandemic and it’s now a $100 billion dollar industry, according to Worldpay. It lets consumers delay payment on store purchases for 30 days or pay in a few installments, usually without charging interest.
How Old-Style Buy Now, Pay Later Became Trendy ‘BNPL’: QuickTake
“It’s still early days but our product will be better than Klarna’s,” Storonsky said. “Our product will allow you to buy now and pay later with any merchant. It will also be fully regulated.”
BNPL’s rapid spread has regulators worried about young borrowers getting in over their heads, while traditional banks are concerned about the threat to their credit card and consumer-lending businesses. Britain’s Financial Conduct Authority has called for the industry to be properly regulated, which would impose extra costs on the fintech startups if they had to beef up affordability checks.
“Regulation is going to be coming to the ‘Buy Now Pay Later’ market sooner than one might expect, and that will change the dynamic quite a bit,” Barclays Plc Chief Executive Officer Jes Staley said recently.
Bank approach
Revolut launched in 2015 with a prepaid card for currency exchange but it has evolved and now offers products from buying and selling cryptocurrency to business banking and commission-free stock trading in the U.S. It has applied for banking licenses in many countries including the U.K. “We’re competing with banks that are 150 years old,” Storonsky said. “We want to get a banking license to increase the level of confidence and the level of trust in our business.”
Revolut is also working on small deals for niche products, he added. “We’ve almost done two or three acquisitions,” he said without elaborating.
Revolut has been approached by a bank for a potential merger in the past, Storonsky said without revealing a name. “Three or four, five years ago there were some conversations, but I was very strict that we’re not for sale.”
“The only thing I’d buy from a traditional bank, it’s the license.”
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