Visa Inc. is buying a stake in Swedish payments technology firm Klarna AB and forming a strategic partnership, as both companies aim to expand outside their core markets.

Terms of the deal were not disclosed, but Klarna plans to issue new equity as part of the transaction, the Swedish company's chief commercial officer Michael Rouse said in an interview.The investment will allow Visa to reach more mobile commerce merchants, particularly in the Nordic region and Germany, said Jim McCarthy, Visa's executive vice president for innovation and strategic partnerships. But both McCarthy and Rouse said it was too soon to say exactly what new products or payment options Visa and Klarna might develop.

"In the mobile-first world, we need to partner with technology companies," McCarthy said. "And we see these partnerships as core to our growth."

Stack of Visa cards
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Rouse said the Visa partnership might bolster Klarna's position in markets where credit cards are more popular than invoice financing. These markets would include the Netherlands, the U.K. and, most importantly, the U.S., where Klarna has been trying to make inroads since September 2015. The company signed up Overstock.com Inc., Shoes.com Inc. and Shopify Inc. as anchor customers in the U.S., but recently revamped its sales force and corporate structure there in order to win over more merchants.

Like PayPal, Klarna has historically positioned itself as an alternative to credit cards like Visa. "We have been somewhat enemies in the past in terms of competing and the way we went to market," Rouse said of Visa.

However, Klarna announced it had received its full banking license in Sweden in June, paving the way for the Swedish firm to issue loans and, potentially, credit cards. Klarna has been best known for providing instant, short-term consumer credit, allowing customers to defer paying for goods purchased online until they are delivered. It has also allowed merchants to offer installment payment plans for higher-priced items.

Visa has previously made strategic investments in technology-oriented payment providers Stripe and Square Inc. In 2014, it also invested in digital wallet startup LoopPay Inc., which Samsung bought for $250 million the following year. In addition, Visa struck a deal last year with one-time rival PayPal that gives Visa greater reach into digital commerce in exchange for PayPal getting more certainty over fees its charged to use the Visa network.Founded in 2005, Klarna has raised $332 million in venture capital from investors that include Moscow-based investment firm DST Global and U.S. venture capital firms General Atlantic and Sequoia Capital. It was valued at $2.25 billion in 2015 when a group of insiders sold shares privately, making it one of Europe’s tech unicorns, or private companies valued at more than $1 billion.

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