Conversion rates on m-commerce sites shrink when consumers are on mobile devices, but it’s a problem that Niklas Adalberth, cofounder of Klarna, claims he can fix.
The rate at which browsers become buyers on a site falls through the floor when they are on a smartphone or tablet rather than a PC, he said.
The rate for the desktop is pretty low anyway – only two to four per cent of users find a product and then complete a purchase – but mobile devices are worse,.at only a tenth of that figure.
One barrier is that mobile users have to fiddle around with entering a password on their mobile devices. Eliminating that barrier can improve conversion, argues Adalberth.
The trick is separating buying and paying on a smartphone or tablet, which is what Klarna does.
The Swedish firm lets consumers pay for their goods at a later date, so removing friction from the process while obviously increasing the risk of non-payment, for instance through fraud.
It essentially takes on that risk on behalf of merchants. It serves a growing number of partners as its business has branched out from its Nordic base to the UK and Germany. The US is to follow.
“Merchants gets more sales, but we take on risk financially if the user does not settle in 14 days or doesn’t pay”, he said.
However, the firm does not accept every consumer, so managing its risk downward. It makes a judgement based on information
Klarna currently handles about 250,000 transactions every day, representing tens of billions of Euros in transactions every year. The firm, which has been around ten years, has an annual revenue of €230 million and is profitable.
Adalberth said the firm’s technology boosts the conversion on mobile transactions up to four per cent, and even higher on the desktop.
The challenge is assess risk in real-time, using data such as IP address and phone number. Users who don’t get past this stage are encouraged to enter their password and other data like a normal transaction.
Currently, the acceptance rate in its home market of Sweden is 90 per cent, Germany and the UK are around 80 per cent. “It’s easy if you’ve got good credit,” he said.
Adalberth was speaking during a session on Digital Transactions and Social Interactions.