Today the Swedish retailer H&M announced a $20 million investment in the payments company — and as of June 2017, a fully licensed bank — Klarna, which is also based in Sweden.

The move underscores the growing importance of a smooth payments experience and is expected to radically alter the payments experience at H&M both online and in-store.

Early chatter on social media praised H&M (officially, Hennes & Mauritz AB) for taking an equity stake in Klarna. Could H&M follow Starbucks as a retailer that is also a payments innovator?

Smart for H&M to get some equity as a result of a partnership with Klarna.https://t.co/oKkPT9whLz

— Charley Ma (@CharleyMa) October 8, 2018

But with a valuation north of $2.5 billion, that equity stake would clock in at less than 1%. Still, H&M plans to work with Klarna in innovative ways. Klarna described it this way on its blog:

This partnership will power the H&M Club payment programme, provide an enhanced omni-channel customer payment offering, a streamlined post-purchase service in the H&M app and many other services. This will deliver an unrivalled experience that will delight H&M customers across all touchpoints.

Klarna’s single technological platform will enable an outstanding end-to-end customer journey across all H&M channels. This will include frictionless instore, mobile and online payments, simplified deliveries and returns and the flexibility to decide how and when to pay, including the popular ‘try before you buy’ Pay later service. All of these will be integrated into the next generation of the H&M app and H&M Club. The result will be an inspiring, relevant and convenient experience for millions of customers across 14 H&M markets, with the UK and Sweden in the first phase, expected to go live in 2019.

Daniel Claesson, head of business development with H&M, said in a press release, “We at H&M are very excited about this partnership. We want to make it possible for customers to move freely between the various channels and choose how they want to shop and experience our offering online and instore. This partnership will bring tailormade payment solutions to our customers and accommodate evolving shopping patterns and needs.”

It’s likely that the experience will be deployed and tested exclusively in Europe. H&M has more than 4,000 stores in 70 countries.

In the summer of 2017, Klarna was awarded a banking license by Finansinspektionen, the Swedish Financial Supervisory Authority. At the end of 2017, a Klarna annual report noted it serves more than 90,000 merchants, with over 800,000 transactions a day.