Following its recent IPO filing, Swedish fintech giant Klarna has announced that it will be the exclusive provider of buy now, pay later loans for Walmart, a partnership that was previously held by its rival Affirm. This new partnership was made public on Monday, with Klarna set to provide the loans through OnePay, a fintech startup in which it holds a majority stake and is also backed by Ribbit Capital.

The loans will be made available to Walmart customers later this year, according to a statement from Klarna. This move marks a significant shift in the market, as Affirm had previously been the exclusive provider of buy now, pay later loans for the retail giant.

The news had a notable impact on Affirm’s stock, which fell by 8% to just over $46 by early afternoon on Monday, as reported on Yahoo Finance.

Klarna and Affirm have been rivals in the fintech industry for years, although Affirm has primarily focused on the US market. Affirm went public in 2021 and recently announced that it had achieved $80 million in GAAP net income. In contrast, Klarna suffered a significant blow to its valuation but has since made a comeback, reporting a net profit of $21 million in 2024, a substantial improvement from its loss of $244 million in 2023.

In an interview with PaymentsDive last September, Affirm CEO and co-founder Max Levchin highlighted the differences between his company and competitors like Klarna. Levchin emphasized that Affirm focuses on earning revenue from individual transactions, whereas Klarna and others generate revenue from marketing. However, a Klarna spokesperson disputed this claim, stating that the majority of Klarna’s revenue comes from transactions, with a smaller portion derived from marketing.

Levchin further noted that Affirm does not monetize transactions through advertising or marketing, instead focusing on creating financially sustainable transactions. He expressed his preference for Affirm’s business model, stating that every transaction needs to make sense financially.

While Klarna has a more global reach than Affirm, it has been expanding its presence in the US market. In an interview with TechCrunch last April, Klarna revealed that the US and Germany are its largest markets, with the US often being the largest on a quarterly basis. The partnership with Walmart is expected to further increase Klarna’s presence in the US, given the retailer’s massive scale and $441.8 billion in US revenue last year.

The partnership between Klarna and Walmart is a significant development in the fintech industry, and it will be interesting to see how it impacts the market in the coming months. Reporter’s note: A statistic about the potential impact of Walmart’s US volume on Klarna’s total GMV was removed at the company’s request.