A $5.5 billion European fintech backed by Snoop Dogg is coming for Paypal. Here's its 1 huge disruptor advantage.

Klarna sebastian siemiatkowski and Niklas Adalberth

Swedish payments company Klarna has announced $460 million in new funding to make it Europe's most valuable fintech, at $5.5 billion.
The series E fundraising will be used to help boost the company's growth into the US market.
It's a sign that disruption will continue to impact existing services in the US like Paypal and increases the competition in the landscape.
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In "Gin N Juice," Snoop Dogg raps about his "mind on my money and my money on my mind." Fast forward to 2019, and the artist may have even more bang for his buck as his investment in Swedish fintech Klarna booms in the US.

The company announced $460 million in new funding to become Europe's most valuable fintech at $5.5 billion, and now it plans to take on Paypal in the US market. Snoop Dogg has a share in the company via his investment vehicle Casa Verde Capital.

It's another jump in competitiveness in the payments space, and Klarna believes it has an edge over its rivals because its access to customer data at a much more fundamental level. Most payments services will note the amount spent and the name of the merchant, but Klarna can show users receipts — with images of exactly what they spent money on —and aggregates that data to help them make better financial decisions.

Being an early adopter on leveraging customer data is helping to boost the company's presence in US. It already has a large footprint in Europe.

Its latest funding round puts it in direct competition with the American payment service provider PayPal, who earlier this year reported a fall in earnings after its services were phased out by Ebay.

"The future of fintech is very clear to us, and data is key to that," Klarna CEO Sebastian Siemiatkowski told Business Insider in an interview. "The customer shares their data with us and in turn, we create value for them. That's what differentiates us for investors."

The company could also bring in additional revenue by selling to retailers the bevy of data it collects, such as purchase behavior, trends, and customer interests.

Klarna processes invoices for online stores and makes sure that the customers pay for the goods they ordered. For example, customers can use Klarna to pay by invoice, installment or immediate bank transfer. Currently, the company is working with more than 1,000 traders, and processes a total amount of $10 billion.

"Klarna is very user-oriented and does some things better than Paypal," payment expert Maik Klotz told Business Insider. With the physical credit card that Klarna now issues, together with Visa, the company is also making the leap to the cash register in stationary retail. "It wouldn't be a big surprise if Klarna soon offered its own checking account," says Klotz.

While Paypal battles payments services such as Stripe, Klarna has teamed up with Stripe on its product offering, making integrations even easier for merchants and retailers. Siemiatkowski claims that Klarna's broad product offering actually makes it more akin to a Chinese super app such as Ant Financial's WeChat.

Stripe famously provides the "buy" button within apps like Facebook and Twitter, which is an additional boon to Klarna's business in the US. The company has also cited the growing use of debit cards among American millennials as a market trend powering Klarna's buy now, pay later technology.

The fact that the company's latest round was led by Silicon Valley growth firm Dragoneer Investment Group, which has a track record of helping to build out exciting fintechs like Chime, is key to Klarna's continued push into the US.

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