The news: Adyen launched an Android point-of-sale (POS) terminal that integrates Klarna and Alipay+ as payment options, per a press release.

• The SFO1 multimedia countertop terminal has a customer-facing display that lets merchants showcase video content, promote loyalty programs, and provide other features.
• The terminal is rolling out in the US and Europe and will be available by the end of 2024.

Why it matters for Klarna: Building upon a prior partnership between the two payment companies, Klarna will now be included as a payment option across more than 450,000 Adyen terminals in brick-and-mortar locations.

This could significantly accelerate Klarna’s in-store push.

• BNPL volume is mostly online, but fintechs like Klarna are driving more in-store adoption to keep up their growth momentum as the maturing industry’s volume is decelerating.
• They are mainly pushing in stores through their debit card offerings, but a direct integration into POS systems simplifies the purchase process for consumers and eliminates the potential hurdle of needing to sign up for the cards.

What it means for Alipay: This partnership is also a win for Alipay+ as it looks to expand globally.

• While Alipay has a huge following in China, its presence in other parts of the world is more limited. Alipay has about 1.3 billion users worldwide, per Enterprise Apps. But 900 million of those users are in mainland China.
• To accelerate growth, Alipay is looking globally, with Alipay+, its cross-border arm, playing a key role. Alipay+ lets consumers outside of China make payments both while visiting the country and in other regions through partnerships like this one with Adyen.
• After making various tie-ups and investments in Southeast Asia, the company is now focused on Europe, Latin America, and the Middle East.

Our take: Adding diversified payment methods should also help Adyen’s terminal gain traction. Merchants know they can lose business if a customer’s preferred payment option is not available, making payment diversification crucial for both merchant and customer satisfaction.

Innovating its POS products will also help Adyen stay competitive as more entrants join the space. The rise of mPOS is threatening the fixed POS space, reducing growth opportunities for terminals like SFO1. The US mPOS market will grow at a 9.3% average annual rate from 2023 to 2027, more than five times faster than in-place hardware, per our forecasts.