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Klarna Group plc, commonly referred to as Klarna, is a Swedish fintech company that provides online financial services. The company provides payment processing services for the e-commerce industry, managing store claims and customer payments.[4] The company is a "buy now, pay later" service provider.[5]

Key Information

The company has more than 5,000 employees. Most work at the headquarters in Stockholm and offices in Berlin. In 2021, the company handled about US$80 billion in online sales.[1]

Klarna initially planned to file as an American initial public offering (IPO) in April 2025 and was projected to be valued at $15 billion.[6] The valuation was about one-third of its peak of $45.6 billion in 2021.[7][8] Klarna delayed its IPO filing as a result of market volatility amid tariff uncertainties under the Trump administration, but launched its IPO in September 2025 and raised $1.37 billion.

History

[edit]

Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson founded Klarna in 2005 after participating in the Stockholm School of Economics annual entrepreneurship competition.[9][10][11] Angel investor Jane Walerud invested in their company and connected them with a team of programmers.[12]

In 2007, venture capital firm Investment AB Öresund invested in the company.[13] In 2010, Klarna started providing services in Norway, Finland, Denmark, Germany and the Netherlands. It also received an investment from Sequoia Capital,[14] and increased its revenue by over 80% to US$54 million (~400 million SEK).[15] In 2011, British newspaper The Telegraph listed Klarna as one of Europe's 100 most promising young tech companies.[16]

In 2011, growth equity firm General Atlantic led a $155 million investment round joined by DST Global, and General Atlantic's managing director Anton Levy joined the board of directors.[17][18] In May 2011, Klarna acquired Israeli company Analyzd, which provided risk management and fraud prevention services. As of 2011, about 40% of all e-commerce sales in Sweden were through Klarna.[19] In 2013, Klarna and German SOFORT AG [de] merged to become Klarna Group.[20]

Klarna launched in the United States in 2015,[21] and the US has become its principal focus for growth, after securing exclusive partnerships with luxury department store Macy's.[22][23][4][24] That year, Minister of Enterprise and Innovation Mikael Damberg dubbed Klarna one of Sweden's "five unicorns", by which he meant startup companies that had succeeded in growing and attracting international investments. The other four were Spotify, Mojang, Skype, and King.[25] In 2018, Klarna acquired Close Brothers Retail Finance from the UK Close Brothers Group.[26][27]

In 2019, Klarna raised $460 million with plans to expand its operations in the US, with participation from Dragoneer Investment Group, Commonwealth Bank of Australia, HMI Capital, Merian Chysalis Investment Company Limited, and others.[28] This funding round valued the company at $5.5 billion, making Klarna the largest fintech start-up in Europe.[29] In 2020, Klarna acquired Nuji, a marketplace for fashion and lifestyle goods.[30]

In 2020, Ant Financial, the payment affiliate of Chinese e-commerce company Alibaba, invested in Klarna as part of a partnership between the two firms.[31] In June 2021, Klarna raised $639 million in a fundraising round led by SoftBank Group's Vision Fund 2, increasing the company's valuation to $45.6 billion.[32] In July 2021, Klarna acquired Stocard, an app for storing loyalty cards.[33]

In November 2021, Klarna launched its physical card, which enabled users to make purchases in interest-free installments.[34] In January 2022, Klarna launched its physical card in the UK.[35] The card had a wait list of 400,000 users as of January 2022.[36] In 2021, the company was Europe's most valuable private tech company, at a $45.6 billion valuation. Its valuation fell to $6.7 billion in 2022 after it struggled to attract additional outside investment.[37][38][39][40]

In March 2022, Klarna acquired PriceRunner, a company that provides price comparisons on products.[41] In May 2022, Klarna laid off roughly 10% of its workforce.[42][43] In June 2022, Klarna announced a partnership deal with card issuer Marqeta to bring physical Visa cards to the US.[44]

In July 2022, Klarna raised $800 million in funding at a valuation of $6.7 billion. Its valuation dropped 85% in one year, in line with decreasing valuations of unprofitable technology companies.[39] Klarna lost $580 million between January and July 2022.[45] In September 2022, it announced plans to lay off an additional 100 employees. The announcement came after budget revisions due to its drop in valuation and announced losses. Since September 2022, Klarna offers savings accounts and deposits to Spanish customers through Raisin Bank [es; de].[46]

In October 2022, the company launched a new "Klarna Creator" application for retailers and influencers to collaborate on brand campaigns and track their earnings.[47] In January 2024, the company announced a plan for a monthly subscription plan ahead of an anticipated initial public offering later in the year. Users of the service, called Klarna Plus, would earn double the amount of usual reward points, attain access to a selection of discounts from partners like Nike and Instacart, and see service fees waived when using the Klarna One Time Card. The fee would be $7.99 each month, as opposed to typical fees of $1 or $2 when using the service outside the network at retailers like Walmart or Costco. The company's Chief Marketing Officer, David Sandstrom, said there were also plans for a high-yield savings account in the US, with potential for subscribers to earn a higher rate than non-users.[48][49][50]

In February 2024, Klarna announced that AI had replaced 700 of its employees, about 10% of the workforce at the time.[51][52] In November 2024, Klarna filed for an initial public offering in the US.[53] In February 2025, Klarna's valuation was estimated at $15 billion.[54] Klarna filed its IPO prospectus in March 2025 with plans to go public on the New York Stock Exchange under ticker symbol KLAR.[55]

In April 2025, Klarna paused its plans for a U.S. IPO due to market instability caused by President Trump's new tariff policies, which shook markets all over the world. Klarna had planned to raise over $1 billion at a valuation above $15 billion. Although the IPO market was showing signs of recovery in 2025, recent listings like Venture Global and CoreWeave had mixed receptions. Market analysts say that such instability often leads companies to delay IPOs. Klarna had 93 million users in 26 countries by the end of 2024, and had seen its valuation drop from a peak of $45.6 billion in 2021 as online spending slowed post-pandemic.[56]

In June 2025, Klarna announced it would pilot a debit card program in the US market, ahead of a full release in Europe. The Klarna Card will allow users to access FDIC-insured funds and Klarna's pay later services.[57] In September 2025, Klarna relaunched its US initial public offering (IPO) which was priced at $40 a share and raised $1.37 billion. At the close of the first day of trading, its valuation was over $17 billion.[58]

In July 2025, Klarna announced a partnership with the fashion resale marketplace Poshmark.[59]

Controversy

[edit]

Regulation

[edit]

In the UK, Klarna operates in the rapidly growing post-payment sector which has been criticised for encouraging consumers to get themselves into unserviceable levels of debt.[60] In February 2021, the UK Government announced that the sector would be subject to regulation from the UK's Financial Conduct Authority.[61]

In Sweden a large number of complaints regarding Klarna were sent to the Swedish Consumer Agency in 2014. Many customers had received reminder fees and threats about debt collection without having received a proper invoice. It was speculated if this was an unethical business model since the company made money on these reminder fees and Klarna also had a subsidiary dedicated to debt collection. The Swedish Consumer Agency found a reason to investigate how Klarna added credit fees for partial payments.[62] In 2013, the co-founder Niklas Adalberth said in a presentation during the startup conference Arctic15 that: "That is one of our revenue streams... the best customer is the one that doesn't pay directly but actually [gets] a reminder and then also debt collection because we are able to add the legal fees."[63]

In Germany, the District Court of Bremerhaven ruled in 2022 that Klarna could not demand a flat rate of €1.20 for a reminder by e-mail because Klarna had not submitted any corresponding costs.[64][65]

Privacy

[edit]

In February 2020, Der Spiegel reported that Klarna's autofill feature allowed anyone to extract personal information, such as phone number, postal address and date of birth, only based on the email address and postal code of a customer.[66] In October 2020, Klarna mistakenly sent a marketing email to people who had never disclosed their contact information to Klarna. This triggered an investigation by the Information Commissioner's Office in the UK.[67]

For a brief period in May 2021, users could view the information of other users using their own login information. Klarna claims that user information was exposed randomly, and that these exposures only contained non-sensitive data. But users claimed that they were able to view addresses, phone numbers, and payment details of other people.[68][69]

Identity thieves have used Klarna to commit fraud. They exploit Klarna's buy now, pay later scheme to make purchases with a small upfront payment on a stolen account, flip those goods at a much higher price, and then evade making payments.[70][71][72] CEO Sebastian Siemiatkowski was summoned to the Swedish Ministry of Finance to answer questions about its management of identity theft and the debts of customers in May 2019.[73] In 2022, the company said that its fraud checks and controls are as strict as those of banks.[71]

In March 2022, the Swedish Authority for Privacy Protection (Integritetsskyddsmyndigheten) fined Klarna 7.5 million kr for inadequacies in its privacy notice and handling of personal data. Klarna said it would appeal the decision for further clarification on the guidelines.[74][75]

Layoffs

[edit]

In May 2022, Siemiatkowski revealed it would be laying off more than 10% of its employees. A former employee described the layoffs as "chaotic". When Siemiatkowski posted a list of the fired employees on LinkedIn, several users described his post as "tone deaf".[76]

E-commerce scams

[edit]

Many Swedish e-commerce scams use Klarna as their payment solution.[77][78] There are many cases of ID thefts, when Klarna is used to make transactions in other people's names.[79][80]

Recruitment and AI

[edit]

In December 2024, the CEO said how AI affected his company's hiring policies. According to him the company did not recruit last year because, "AI can do all of the jobs that we humans do. It's just a question of how we apply it and use it".[81] In May 2025, the CEO told Bloomberg the company was hiring humans again as over-reliance on AI approach led to "lower quality".[82]

See also

[edit]

References

[edit]
[edit]
Revisions and contributorsEdit on WikipediaRead on Wikipedia

Klarna

View on Grokipedia
from Grokipedia
Klarna Group plc, commonly referred to as Klarna, is a global financial technology company and digital bank founded in 2005 in Stockholm by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson. The company is now domiciled in London and listed on the New York Stock Exchange under the ticker KLAR following the completion of its initial public offering on September 9, 2025, with shares priced at $40 each and trading beginning on September 10, 2025, building the next-generation commerce network specializing in buy-now-pay-later (BNPL) and retail banking services that enable consumers to split purchases into interest-free installments or pay later. The company has expanded globally, operating in 26 countries with more than 114 million active users and partnerships with over 850,000 merchants, facilitating flexible payment options including the Klarna Card which reached 4 million sign-ups in four months since July 2025, digital banking services with AI-powered shopping search and personal assistant features, and integration into e-commerce platforms and its own shopping app. Klarna achieved rapid growth, reaching status and peaking at a $45.6 billion private valuation in mid-2021 before economic pressures led to adjustments. It went public via IPO in September 2025 at a $15 billion valuation. Q2 revenue of $823 million reflected 20% year-over-year like-for-like growth, and gross merchandise value was up 19%. The firm reported its first full-year net profit of $21 million in 2024 after prior losses exceeding $700 million annually. It attributed improvements to cost efficiencies including AI-driven automation that initially replaced the workload of around 700 roles. In May 2022, Klarna conducted a single 10% layoff affecting approximately 700 employees. Subsequently, workforce reduction from 5,527 in 2022 to 2,907 by late 2025 was achieved primarily through natural attrition (15-20% annually) and a hiring freeze, not additional layoffs. In 2024, Klarna implemented an AI assistant that managed approximately two-thirds of its customer service interactions, effectively performing the work of around 700 full-time agents. However, by May 2025, CEO Sebastian Siemiatkowski acknowledged that an overemphasis on cost reduction led to a decline in service quality. The company subsequently initiated a pilot program to reintroduce human agents by recruiting students, individuals in rural areas, and enthusiast users familiar with the product, in flexible remote setups to enhance customer experience, adopting a hybrid model that combines AI efficiency with human empathy for complex customer interactions. Despite these, Klarna's focus on redefining commerce through technology has positioned it as a leader in the next-generation commerce network, though regulatory scrutiny on risks persists across the industry.

History

Founding and Early Growth (2005–2012)

Klarna was founded in 2005 in , , by , Niklas Adalberth, and Victor Jacobsson, who met while studying at the and developed the idea through a competition there. In 2004, angel investor Jane Walerud met Sebastian Siemiatkowski, invested €60,000 for 10% equity, and introduced the founders to a team of programmers who built the initial platform in exchange for 37% shares. Initially named Kreditor, the company offered an invoice-based payment solution for , enabling consumers to receive goods before paying within a deferred period—typically 14 days—while Klarna assumed the and verification process to address issues with traditional failures in . This model aimed to boost merchant conversion rates by simplifying checkout and reducing cart abandonment. The inaugural Klarna transaction processed on April 10, 2005, at 11:06:40 a.m., at the Swedish bookstore Pocketklubben, marking the start of operations in a nascent retail environment. Early funding included an initial round in November 2005, raising 10 million SEK from a Swedish firm, which supported product development and merchant onboarding in . By 2007, Klarna had established a foothold in the domestic market, processing growing volumes amid rising adoption, and secured its first major acquisition in 2011 to bolster capabilities ahead of broader European entry. Focusing primarily on Sweden during its initial phase, Klarna expanded to neighboring Nordic countries like Norway, Denmark, and Finland by the late 2000s, leveraging low default rates in these markets to refine algorithms. The company rebranded to Klarna in , reflecting a shift toward a more consumer-friendly identity, and entered around the same time, capturing early through partnerships with online retailers. By , Klarna handled roughly 40% of Sweden's online payments, with merchant adoption driving conversion uplifts of 20-30% via streamlined invoicing. This period culminated in when Klarna attained status with a valuation surpassing $1 billion, fueled by accumulated transaction volume and investor confidence in its scalable model.

Expansion and Challenges (2013–2020)

In February 2017, Klarna announced the acquisition of BillPay, a German online payments company, which was completed in September 2017, significantly strengthening its position in the DACH region. In 2017, Klarna rebranded, adopting pink as its primary color, and received a full banking license from the Swedish Financial Supervisory Authority. In 2017, Klarna achieved robust growth, with the following key financial and operational metrics:
  • Full-year total sales volume increased 42% year-over-year.
  • Total operating revenues rose 27% to SEK 4,526 million (from SEK 3,561 million in 2016).
  • Operating income reached SEK 524 million.
  • Net income was SEK 346 million.
  • For the second half (July–December 2017), sales volume grew 43%, operating revenues increased 32% to SEK 2,474 million (from SEK 1,868 million), operating income reached SEK 203 million, and net income was SEK 117 million. The company onboarded 26,000 new merchants, bringing the group total to 89,000, while 19 million new consumers used Klarna's services during the year. Key milestones included obtaining a full Swedish banking license in June, enabling deeper value chain integration and broader offerings while preserving Klarna's consumer-focused, product-driven, and technology-intensive identity.
For the nine months ended September 2018, Klarna's total operating revenue grew 36% to SEK 4,294 million, while gross merchandise volume increased by over 40%, attributable in part to the integration of BillPay. Operating income, however, decreased owing to heightened strategic investments. In 2018, Klarna sustained accelerated growth, with transaction volume increasing over 40% year-on-year, driven by existing and newly onboarded merchants, particularly in the UK and Germany, alongside the successful integration of BillPay. For January–September 2018:
  • Total operating revenue rose 36% to SEK 4,294 million (from SEK 3,159 million in the prior-year period), fueled by strong merchant demand for core products such as Pay Later and growing consumer adoption of the Slice It installment option.
  • Operating income for the period was SEK 113 million (down from SEK 488 million), reflecting continued strategic investments in business capabilities, product development, and talent acquisition to support long-term expansion. Key highlights included:
  • The acquisition of Close Brothers Retail Finance, significantly bolstering Klarna's omnichannel position in the UK.
  • Expansion of the merchant base beyond 100,000 live partners, with notable additions such as H&M brands Arket, Monki, and Weekday (implementing full Klarna Checkout across 14 markets), BEAUTY BAY (UK and Germany), Etsy Online Marketplace (Germany), NAKD (Netherlands, Norway, UK, and Finland), and Swoon Editions (UK home vertical).
  • The launch of Universal Checkout in partnership with MYBESTBRANDS, Germany’s largest premium/luxury fashion shopping mall, enabling single-cart multi-merchant purchases.
In 2018, Klarna launched its mobile app, which provides features for shopping, payments, and personal finance management.

Payment Processing Pivot (2010–2015)

From around 2010 to 2015, Klarna attempted to expand into general merchant payment processing, competing with emerging providers such as Stripe and Adyen through products like Klarna Checkout. However, these efforts faltered, culminating in the decisive loss of Spotify—a prominent Swedish client—to Adyen in 2015. This setback forced Klarna to pivot from a merchant-focused payment processor to a consumer-centric model emphasizing buy-now-pay-later services and direct consumer relationships, fundamentally reshaping its strategy toward retail banking. The shift coincided with the departure of co-founder Niklas Adalberth from operational roles in September 2015. In 2013, Klarna merged with German payments provider SOFORT AG, enhancing its footprint in by integrating real-time solutions and expanding its merchant network. This was followed by entry into the market in 2014, marking its first major push beyond and , with initial partnerships focused on retailers. By 2015, Klarna launched operations , partnering with select online merchants to introduce its buy-now-pay-later model amid a competitive landscape dominated by traditional credit cards. Further geographic expansion included the in 2010 and in 2020, alongside acquisitions such as German invoice firm BillPay GmbH (announced early 2017 and completed in September 2017 for approximately €60 million), which strengthened its position in and installment payments in . These moves were supported by funding rounds, including a $160 million Series D in November 2015 led by , valuing the company at around $2.4 billion, and subsequent raises that fueled product diversification into personal loans and savings accounts. Regulatory hurdles emerged as Klarna scaled, particularly around consumer protections and anti-money laundering compliance in expanding markets. In October 2015, the company applied for a full from Sweden's Finansinspektionen, a process that took 20 months due to stringent requirements for capital reserves and systems, finally granted on , 2017, allowing it to offer deposit accounts and expand beyond payments into full banking services. This license addressed criticisms of operating as a non-bank lender without , but integration challenges arose from harmonizing operations across jurisdictions with varying rules on interest-free deferrals and default penalties. In , post-acquisition scrutiny from BaFin intensified over and lending practices, prompting adjustments to automated assessments to mitigate over-indebtedness risks. Financial and operational strains intensified amid rapid growth, with gross merchandise volume surging but credit losses rising due to uncollateralized consumer loans in new markets like the US, where repayment rates lagged European benchmarks. Competition from rivals such as Afterpay and Affirm pressured margins, leading to investments in AI-driven fraud detection and customer scoring to curb defaults, which reached notable levels during economic slowdowns in 2019. By 2020, Klarna secured a $650 million round led by Silver Lake at a $10.75 billion valuation, yet reported operational losses as expansion costs outpaced revenue from merchant fees and late penalties. These challenges underscored the tension between aggressive scaling and sustainable risk controls in the nascent buy-now-pay-later sector.

Recent Milestones and Recovery (2021–2025)

In the wake of rapid expansion during the low-interest-rate environment of the early 2020s, Klarna encountered significant headwinds starting in 2022. This included a sharp valuation decline from $45.6 billion in mid-2021 to $6.7 billion by late 2022, driven by rising , higher interest rates, and increased scrutiny on buy-now-pay-later (BNPL) risks. The company responded with aggressive cost reductions, including a hiring freeze outside roles and substantial workforce reductions. Headcount shrank from approximately 7,400 in 2022 to 3,000 by mid-2025 through and layoffs. A pivotal element of the recovery was Klarna's heavy investment in , particularly for and operations. In 2024, AI systems replaced around 700 roles, enabling faster query resolutions and contributing to operational efficiencies that supported five consecutive quarters of adjusted profitability by Q2 2025. rebounded with 22.8% year-over-year growth to $2.8 billion in 2024, marking the company's first annual net profit of $21 million since 2019. This represented a return to profitability after strategic losses incurred during aggressive geographic expansion, particularly in the United States. This was followed by Q2 2025 revenue of $823 million and adjusted operating income of $29 million. Consumer base expansion accelerated, reaching 100 million active users in April 2025, aided by integrations like Stocard and merchant partnerships. Financial stability improved further with profitability achieved in Q4 2023 and sustained growth. However, challenges persisted, such as a 17% rise in Q1 2025 consumer credit losses to $136 million amid economic pressures. The recovery culminated in a long-awaited (IPO) filed in November 2024 and executed on September 10, 2025, on the under ticker KLAR. It priced at $40 per share for a $15.1 billion valuation—well below the 2021 peak but a marked rebound—before shares surged 14.6% to $52, pushing market cap above $19 billion. This listing signaled renewed investor confidence in BNPL's maturation and Klarna's pivot toward diversified, AI-enhanced services.

Business Model

Core Buy Now, Pay Later Mechanism

Klarna's (BNPL) mechanism enables consumers to make purchases from partnered online retailers by deferring payment through structured installment plans. Klarna advances the full purchase amount to the merchant upon approval. At checkout, shoppers select Klarna as the payment method. This triggers an automated eligibility check that typically involves a soft credit inquiry, device data, and purchase history to assess risk without impacting the consumer's credit score. Klarna leverages Open Banking APIs for instant bank verification and payments in 16 European markets: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, and United Kingdom. This reduces reliance on card networks and enables lower-cost payment processing. If approved, which occurs instantly for most eligible transactions, Klarna disburses funds to the seller immediately, assuming the credit risk while the consumer repays over time. In the United States, Klarna processes payments via ACH (Automated Clearing House), enabling direct bank account debits for installment payment collections without credit card transaction fees. Klarna supports SEPA (Single Euro Payments Area) bank transfers across 20 European markets, enabling direct debit and credit transfer functionality compliant with EU payment standards. This infrastructure underpins Klarna's Pay Now and instant settlement features in Europe. Klarna's Express Checkout feature, available to merchants in all 26 markets, enables returning customers to complete purchases with saved payment information and shipping details in a single click, reducing checkout friction and cart abandonment. Klarna offers a 'Sign in with Klarna' social login feature across all 26 markets, allowing consumers to use their Klarna credentials to create accounts on merchant websites. This streamlines the registration process while enabling Klarna to deepen customer relationships beyond payment transactions. Klarna offers a Testing Environment (sandbox) accessible to developers in all 26 markets. This allows merchants to test payment integrations, simulate various payment scenarios, and troubleshoot implementations before going live without processing real transactions. Klarna provides Software Development Kits (SDKs) for multiple platforms and languages across all 26 markets, including:
  • iOS (Swift)
  • Android (Kotlin/Java)
  • JavaScript/TypeScript (Web)
  • React Native
  • server-side SDKs for Node.js, Python, PHP, Java, and .NET
These simplify merchant integration. Klarna also supports NFC-based contactless payments for in-store BNPL through Tap to Pay functionality via the in-app digital wallet, available in 14 European markets. It integrates with Apple Pay and Google Pay, available in 17 markets including the US and UK. This enables BNPL options at point-of-sale terminals. The service offers tiered short-term payment options designed for immediacy and flexibility. Payment plan structures vary by region:
  • The "Pay in 4" plan (available in the United States, United Kingdom, Australia, and Canada, with options varying by market), for purchases typically up to $1,000 depending on market and eligibility, splits the total into four equal, interest-free installments due biweekly. The initial payment is debited at order shipment and subsequent ones automatically from the linked payment method. Over 90% of U.S. purchases use this interest-free option, contributing to Klarna's overall low default rates of under 1%.
  • "Pay in 3" is the standard installment option in the United Kingdom and most European Union markets, splitting purchases into three equal, interest-free installments. The first payment is due at shipment and the next two every 30 days.
  • The "Pay in 30 days" option allows deferral of the full amount for up to 30 days post-delivery, incurring no interest or late fees if paid on time. It supports a "pay for what you keep" model for items subject to returns. For returns, users report the return via the Klarna app or by logging into their account, which pauses the invoice to allow the merchant time to register it and adjust the amount. Refunds typically take up to 14 days and are returned to the original payment method or to the Klarna balance if active. For purchases made with credit options such as "Betala senare" or installment plans ("Dela upp"), full refunds cancel future payments, and any overpayments are refunded or adjusted accordingly. Users must first adhere to the merchant's return policy and contact the merchant directly for any registration issues. If disputes remain unresolved, Klarna investigates and pauses payments until resolution. This reflects the policy in Sweden, with similar processes in other markets.
Premium members can access Cancel-for-Any-Reason Protection for travel and eligible purchases in 16 European markets, providing refund flexibility beyond standard merchant return policies. For larger or extended purchases, Klarna Fair Financing, the company's extended installment lending product distinct from standard short-term BNPL offerings, extends repayment over 6 to 36 months with fixed rates disclosed upfront. These range from 0% promotional offers to standard APRs based on assessment and . Available globally through merchant integrations, with a standalone consumer product in the United States offering longer-term loans at competitive APRs, Fair Financing was available at 151,000 merchants (18% of Klarna's total merchant base) as of Q3 2025. US gross merchandise value was up 244% year-over-year and global gross merchandise value up 139%, generating transaction margins over twice the group average. This contrasts with interest-free installment options which are available across all 26 Klarna markets. Approval for these longer terms may involve a harder check in some cases. Late payments across all plans trigger fixed fees—such as $7 per missed installment in the —and potential reporting to bureaus after repeated defaults. Short-term plans generally avoid initial hard inquiries.

Revenue Generation and Product Diversification

Klarna's primary derives from fees, which constituted 57% of its in , totaling $2.8 billion for the year, a 22% increase from prior periods. These fees are levied on retailers integrating Klarna's solutions, typically as a of gross merchandise value (GMV) or fixed per-transaction charges, compensating for , prevention, and conversion rate improvements without direct reliance on for short-term plans. Consumer-facing fees, including late penalties and on longer-term financing options like "Fair Financing," form a , though minimized in interest-free products such as Pay in 4 or Pay in 30 to prioritize user acquisition over immediate yields. Supplementary income arises from within the Klarna app. Klarna provides merchants with an Ads Manager platform in the US, UK, Sweden, Germany, and France, allowing retailers to create and manage advertising campaigns within the Klarna app, targeting Klarna's 114 million active users based on shopping behavior and preferences. Klarna's On-Site Messaging feature enables merchants across all 26 markets to display promotional messaging about Klarna payment options directly on product pages and at checkout, increasing awareness and conversion rates without requiring customer navigation to external pages. Additional sources include partnerships with retailers for promotions and interchange fees from Klarna's card products. Klarna operates the Creator Platform, an invitation-only service connecting e-commerce brands with digital content creators for performance-based influencer marketing. Creators can establish personalized Creator Shops—dedicated storefronts on Klarna's website and app—to curate product catalogs, provide recommendations linked from social platforms, and earn commissions on sales via affiliate links. Available in major markets including the US, UK, Sweden, Germany, and France, the platform supports a network of over 500,000 creators to drive authentic content and boost retailer conversions. Klarna's One-Time Card feature generates single-use virtual card numbers for secure online transactions, available in the United States, United Kingdom, Sweden, Germany, and France. This disposable card number protects users from merchant data breaches and unauthorized recurring charges. Klarna offers two distinct card products:
  • the Klarna Card, a debit card linked to the user's Klarna balance that allows immediate payments or toggling to BNPL options with no credit impact on application, available in the United States and multiple European markets
  • the Klarna Credit Card, a traditional revolving credit card issued by WebBank exclusively in the United States, featuring installment options alongside standard credit functionality at 28.99% APR and requiring a credit check, which enables revenue from interest in addition to interchange fees.
For returns on purchases made with the Klarna Card (Klarna kreditkort) in Sweden, refunds are automatically credited to the original payment method, typically the linked bank account or the Klarna Card, and not issued in cash. The process may take up to 14 days, with refunds potentially directed to an active Klarna balance if applicable. The Klarna Card, launched in the US in July 2025 and rolled out across 10 European markets in September 2025, achieved 4 million sign-ups within four months and accounted for 15% of all global transactions by October 2025, demonstrating rapid consumer adoption of Klarna's hybrid debit-BNPL card product. In 2024, merchant-related revenue, encompassing these elements, represented about 75% of transaction and service income, underscoring Klarna's pivot from pure lending to value-added services that enhance retailer sales while diversifying fee structures. To mitigate reliance on buy-now-pay-later (BNPL) amid regulatory pressures and funding costs, Klarna has diversified into broader , including a introduced in June 2025 that defaults to immediate payment but allows seamless toggling to BNPL options, positioning it as a hybrid banking tool competitive with digital providers like Chime or . In June 2025, Klarna launched mobile phone plans in partnership with AT&T and other providers, offering 25 million Americans flexible payment options for mobile phone purchases and subscriptions. This marks Klarna's expansion beyond traditional retail into telecommunications services. Klarna's partnership with Zoom, announced in October 2024, introduced flexible payments for Zoom subscriptions in 16 markets. This represented Klarna's strategic expansion into SaaS subscription payments, a category previously dominated by traditional credit cards. Klarna's original Vibe Loyalty Program, which rewarded users with points for on-time payments and app engagement, was discontinued in April 2024 and replaced with the current cashback rewards and membership-based benefits structure. Klarna also offers tiered membership programs—Klarna Plus ($7.99/month in the US), Premium Membership (€17.99/$19.99/month), and Max Membership (€44.99/$44.99/month)—where the Premium and Max tiers include travel insurance coverage in 16 European markets (UK, Sweden, Germany, France, Spain, Italy, Netherlands, Austria, Belgium, Denmark, Finland, Norway, Poland, Portugal, Ireland), providing protection for flight delays, cancellations, and lost luggage, in addition to benefits including rental car protection—Premium members receive Rental Car Protection in 16 European markets, offering collision damage waiver and theft protection when renting vehicles, eliminating the need for expensive rental agency insurance—purchase protection, airport lounge access, and exclusive deals; these are available in the United States, Sweden, Austria, and Norway. This expansion extends to commerce infrastructure, such as marketing tools and app-based shopping features that generate . Klarna's Curated Content feature provides personalized shopping recommendations across all 26 markets, using AI to analyze purchase history, browsing behavior, and trending products to surface relevant items and brands to individual users. Klarna's app includes a price comparison tool available in the US, UK, Sweden, and Denmark, allowing users to compare prices for the same product across multiple retailers within the Klarna network. Users can set Price Drop Alerts in the US, UK, Sweden, and Germany to receive notifications when wishlisted items decrease in price. Klarna provides subscription management tools, enabling users to track, modify, and cancel recurring payments and subscriptions paid via Klarna from a centralized dashboard in the app. This feature is available across Klarna's markets. It also includes banking-like offerings—including the Klarna Bank Account (Klarna Balance), available in 12 markets: the United States, United Kingdom, Sweden, Germany, France, Spain, Italy, Netherlands, Austria, Belgium, Denmark, and Finland. Users cannot directly transfer money from external banks like Wells Fargo to a Klarna account, as Klarna does not offer a fundable personal bank account, wallet, or balance for direct deposits; bank accounts are linked only for outgoing payments on purchases or to settle BNPL balances. Distinct from full banking services limited to Sweden and Germany where comprehensive banking licenses are held—that broaden user engagement beyond installment loans. Klarna also offers interest-bearing savings products in select European markets where it holds banking licenses. In Sweden and Germany, customers can access Fixed Savings Accounts and Flex Savings Accounts with competitive interest rates., reducing single-product risk as evidenced by strategic shifts detailed in its 2025 filings. In January 2026, Klarna launched instant peer-to-peer (P2P) payments, available to users in 13 European countries: Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Poland, Portugal, Spain, Sweden, and the United Kingdom. This service enables instant transfers between Klarna users within these countries, with plans for future cross-border expansions.

Klarna for Business

Klarna extends BNPL capabilities to B2B transactions through its partnership with Billie, enabling business buyers to defer payments for purchases such as supplies, equipment, and services in select markets including Germany, Sweden, Austria, Netherlands, France, Norway, and the United Kingdom. Merchants receive immediate payment while Klarna assumes the credit risk. This service positions Klarna as a competitor to traditional trade credit and business credit cards.

Technological Innovations

AI and Automation Initiatives

In February 2024, Klarna deployed an AI-powered customer service assistant, developed in partnership with , which handled approximately two-thirds of its customer inquiries across 23 markets and multiple languages, equivalent to the workload of 700 full-time agents. The assistant processed 2.3 million conversations in its first month, addressing tasks such as refunds, returns, payment disputes, cancellations, and invoice issues, while reducing resolution times from minutes to seconds. Built using technologies like LangGraph and LangSmith, the system provided contextual, personalized responses but faced criticism for latency issues, with some queries taking up to 20 seconds. Beyond customer service, Klarna deployed AI across marketing operations, achieving a 25% reduction in external marketing agency spending (saving $4 million annually) and a $6 million reduction in image production costs, while simultaneously increasing campaign volume and update frequency. Klarna's Shopping Lens feature uses AI-powered image search to help consumers find products by uploading or photographing items. Available in the US, UK, Germany, Sweden, Denmark, and Norway, this feature leverages computer vision to match visual queries with products across Klarna's merchant network. However, by May 2025, Klarna reversed its aggressive AI-only customer support strategy, resuming hiring of human agents after the CEO acknowledged declines in and . The pivot highlighted limitations in fully automating complex interactions, prompting a hybrid model blending AI with human oversight. In October 2025, Klarna expanded AI applications through a partnership with to implement the Agent Payments Protocol, enabling secure, AI-driven payment processing for autonomous agents. In December 2025, Klarna launched the global 'AI for Climate Resilience Program' to accelerate AI applications for climate adaptation and community resilience in vulnerable regions. The initiative received over 1,200 proposals worldwide and selected six projects addressing challenges in disaster preparedness, water security, agriculture, public health, and biodiversity monitoring, providing funding, mentoring, and technical support over 18 months. This program leverages Klarna's AI expertise to support scalable solutions for societal impact beyond commercial operations. In December 2025, Klarna launched the Agentic Product Protocol, an open standard making over 100 million products discoverable by AI agents. This protocol provides a standardized live feed of products and prices, enabling AI assistants to help users discover and purchase products across Klarna's merchant network.

AI-Driven Workforce Transformation and 'Vibe Coding'

By May 2024, Klarna reported that 87% of its employees were utilizing generative AI in their daily work, with non-technical departments showing high adoption: Communications (93%), Marketing (88%), and Legal (86%). The company's internal AI assistant, Kiki, had answered over 250,000 employee inquiries since its launch, transforming internal knowledge management and operational workflows. Klarna described the adoption as a "game changer" for productivity in operations ranging from software development to data analysis. These internal initiatives included shifting from expensive SaaS solutions to custom, lean AI systems tailored for core functions like risk assessment and personalization. AI integration contributed to a 40% workforce reduction and a 40% decrease in customer service costs per transaction over two years, as stated by CEO Sebastian Siemiatkowski. Klarna's CEO Sebastian Siemiatkowski has publicly discussed the emerging phenomenon of 'vibe coding'—non-engineers using AI tools like Cursor to build software by describing desired outcomes rather than writing traditional code. At a June 2025 SXSW London presentation, Siemiatkowski warned that 'engineers risk losing out to business people who can code,' highlighting a fundamental shift in workforce dynamics. He noted that business-oriented employees who learned to code have become Klarna's most rapidly advancing career track, reflecting the company's strategic emphasis on hybrid business-technical talent in an AI-first operating environment. Siemiatkowski has since emphasized AI's transformative potential while cautioning against underestimating its disruptive effects on .

Digital Infrastructure and Partnerships

Klarna operates a cloud-only digital infrastructure, having fully migrated its operations to cloud platforms to support scalable payment processing and . The company selected (AWS) as its preferred cloud provider to handle core computational needs, including and , building on prior collaborations with Amazon. This shift enabled Klarna to modernize its data platform, incorporating tools for real-time querying and to manage high-volume transaction data across global markets. In June 2025, Klarna announced significant streamlining of its technology stack by eliminating over 1,200 external software-as-a-service (SaaS) providers, replacing them with proprietary AI systems and graph databases such as to enhance interconnectedness and reduce dependency on third-party tools. This overhaul focused on in-house for and , allowing for faster iteration on features like personalized payment options without the overhead of fragmented SaaS integrations. Klarna's teams maintain an active focus on resilience, as detailed in their technical blog, which covers topics such as asset to track and optimize resources across multi-region deployments. Key partnerships underpin this infrastructure. Klarna partners with Marqeta for card issuance infrastructure, enabling the Klarna Card rollout across 13 markets including the US, Sweden, Germany, France, Spain, Italy, Netherlands, Austria, Belgium, Denmark, Finland, Poland, and Ireland. In August 2025, in the United States, Klarna integrated with Chrome Autofill, allowing eligible users to select Klarna as a payment option directly from Google Chrome's autofill menu for purchases over $35, streamlining the checkout process without requiring merchant-side integration. In October 2025, Klarna entered a with Cloud to integrate its full AI stack, encompassing infrastructure, platforms, and generative models like Gemini, aimed at accelerating in-app personalization and creative shopping experiences for users. This collaboration supports agentic AI applications, including Klarna's endorsement of 's Agent Payments Protocol (AP2) for seamless, AI-driven transaction handling. Earlier integrations with OpenAI's large language models have also informed Klarna's agentic AI tools for , contributing to workforce efficiency gains reported in early 2025. These tech-focused alliances prioritize scalable AI deployment over merchant-specific integrations, enabling Klarna to process billions in annual transaction volume with reduced latency and enhanced protocols. In November 2025, Klarna launched KlarnaUSD, a stablecoin pegged to the US dollar, on the Tempo blockchain testnet. Built using Bridge's Open Issuance platform, the stablecoin is designed to enable low-cost, near-instantaneous cross-border transactions. Tempo, a payments-focused blockchain developed by Stripe and Paradigm, supports such innovations, amid global stablecoin transactions processing over $27 trillion annually. Klarna became the first bank to launch a stablecoin on Tempo, with public mainnet deployment scheduled for 2026.

Financial Performance

Funding, Valuation, and IPO

Klarna secured its initial seed funding in 2007, followed by multiple rounds that cumulatively raised over $4 billion in equity by 2022, with key investors including , , and . This momentum continued into 2017, with full-year operating revenues reaching SEK 4,526 million (+27% YoY) and net income of SEK 346 million, supported by capital raises including Additional Tier 1 instruments and a senior unsecured bond (see Expansion and Challenges 2013–2020 for details). A notable 2019 round of $460 million valued the company at $5.5 billion, reflecting expansion into new markets and product lines. Preceding this, January–September 2018 operating revenue reached SEK 4,294 million, up 36% year-over-year, underscoring sustained pre-unicorn momentum. Valuation escalated rapidly during the low-interest-rate environment of 2020–2021, peaking at $46 billion after a $639 million investment led by 2 in late 2021, amid aggressive growth in buy-now-pay-later adoption. Market conditions shifted in 2022, prompting a down round of $800 million at a sharply reduced $6.7 billion valuation, an 85% decline from the prior peak, as rising interest rates and investor scrutiny of unprofitable fintechs pressured valuations across the sector. No major equity raises followed until the , though Klarna pursued alternative financing, including a $26 billion scalable funding agreement with in August 2025 to support U.S. Pay in 4 expansion without diluting equity. In December 2025, Klarna expanded its institutional funding sources through a partnership with Coinbase, enabling the company to raise short-term funding denominated in USDC stablecoin. This diversification into cryptocurrency-based institutional funding represents Klarna's exploration of alternative capital markets infrastructure.
Funding RoundDateAmount RaisedValuationLead Investors
Series Unknown2019$460 million$5.5 billion, others
Late-Stage VCLate 2021$639 million$46 billion 2
Secondary MarketJuly 2022$800 million$6.7 billion, others
Klarna launched its initial public offering on the New York Stock Exchange under ticker KLAR on September 10, 2025, pricing 34.3 million shares at $40 each and raising $1.37 billion, primarily from existing shareholders, with the company retaining about $200 million for operations. The IPO targeted a $14–15 billion valuation, a recovery from the 2022 trough but well below the 2021 high, reflecting improved profitability—Klarna reported its first annual profit in 2024—and a maturing buy-now-pay-later market amid regulatory and competitive pressures. Shares debuted above the IPO price, reaching $52 on opening, though they later fluctuated, falling below $40 by late September before partial recovery into October. Trading remained volatile into early 2026, with shares trading around $23 as of late January 2026, down significantly from the IPO price. Following the Q4 2025 earnings release on February 19, 2026, which reported record revenue but missed forecasts on adjusted operating earnings, shares declined 26.9% to close at $13.85. As of February 20, 2026, no closing price was available, with pre-market trading at $14.07, up 1.59% from the previous close. Amid this decline, class action lawsuits alleged misleading disclosures in the IPO prospectus regarding BNPL loss reserves and credit risks. The listing marked a fintech revival post-2022 downturn but highlighted investor caution over growth sustainability and interest rate sensitivity.

Revenue, Profitability, and Key Metrics

Klarna achieved revenue of $2.8 billion in 2024, reflecting a 22.8% year-over-year increase driven by expanded partnerships and of its buy-now-pay-later services. This marked the company's first full-year net profit of $21 million, a turnaround from the $244 million net loss in 2023 attributed to cost efficiencies and AI-driven reducing operating expenses. Under GAAP, quarterly net income for late 2024 and 2025 showed variability: Q4 2024 profit of $23 million, Q1 2025 loss of $101 million, Q2 2025 loss of approximately $52 million corresponding to a net profit margin of approximately –6.32%, and Q3 2025 loss of $95 million, complementing the reported adjusted operating incomes. (GMV) reached $105 billion in 2024, up 14% from 2023, underscoring steady transaction growth amid competitive pressures in the BNPL sector. In the first half of 2025, Klarna sustained profitability momentum, with Q2 revenue climbing to $823 million, reflecting 20% year-over-year like-for-like growth, adjusted operating expenses of approximately $286 million representing a 3% like-for-like year-over-year increase, and adjusted operating income of $29 million, extending five consecutive quarters of positive adjusted operations. As of June 30, 2025, the company reported cash and short-term investments totaling approximately $6.89 billion, total assets of $19.19 billion, total liabilities of $16.68 billion, and shareholders' equity of $2.51 billion. For the trailing twelve months ended June 30, 2025, total revenue expanded 17% year-over-year to $3.01 billion, while GMV grew 13% to $112 billion, supported by a 19% quarterly GMV increase in Q2 amid higher on-time payment rates. In Q3 2025, Klarna reported record-breaking revenue of $903 million, a 26% year-over-year like-for-like increase, marking its highest quarter ever. US revenue grew 51%, while gross merchandise volume reached $32.7 billion with 3.4 million transactions daily. Balance sheet data for Q3 2025 showed total assets of approximately $20.78 billion and total liabilities of approximately $18.16 billion, resulting in total equity of approximately $2.62 billion; cash and short-term investments totaled approximately $8.29 billion. Cash flow data for Q3 2025 showed operating cash inflows of approximately $472 million and a net increase in cash and cash equivalents of approximately $1.29 billion. The company guided Q4 2025 revenue in the range of $1.065–1.080 billion, marking its first billion-dollar quarter, with full-year 2025 revenue on track for significant growth over 2024's $2.8 billion, bringing trailing twelve months revenue ended September 30, 2025, to $3.21 billion. Klarna released its Q4 2025 earnings on February 19, 2026, reporting record revenue but missing forecasts. Key metrics highlight improved credit risk management, with the global BNPL delinquency rate falling to 0.89% in Q2 2025 from 1.03% in Q2 2024. By Q3 2025, Klarna's realized losses (actual defaults after recovery efforts) improved to 0.44% of GMV, reflecting enhanced consumer payment behavior and models. Klarna reported a 152% increase in revenue per employee since Q1 2023, attributed to AI-driven operational efficiencies including a 40% reduction in customer service costs per transaction, with the company approaching $1 million per employee, a figure exceeding general business benchmarks of $200,000–$500,000 and aligning with high-efficiency fintech peers like Affirm (~$1.5 million in FY2025). Transaction margins also strengthened, contributing to gross profit growth of 22% year-over-year to approximately $585 million in the first half of (latest half-year detail available), signaling scalable unit as active users exceeded 93 million globally, with approximately 43 million in the United States as its largest market, and merchant partners neared 675,000 by late .
Year/PeriodRevenue (USD)Net Profit/Loss (USD)GMV (USD)
2024 (Full Year)$2.8B+$21M$105B
Q2 2025$823MAdjusted Operating: +$29M+19% YoY (Quarterly)
TTM Sep 2025$3.21BN/AN/A

Operations and Leadership

Global Markets and Strategic Expansions

Klarna, founded in in 2005, initially focused on the Nordic markets, expanding to and shortly thereafter to establish its services. Sweden remains a traditional core market where Klarna holds a dominant position in e-commerce payments. By 2014, the company pursued broader European growth through the acquisition of SOFORT, a German online payment provider, for approximately $150 million, which enhanced its capabilities and market share in and select countries. Germany continues as another core market with Klarna maintaining strong dominance in e-commerce payments. This move contributed to Klarna's operations spanning over 20 European nations by the late 2010s, including the following the 2018 acquisition of Close Brothers Retail Finance, a unit that bolstered its installment lending in that market, which accelerated UK omnichannel growth alongside volume increases exceeding 40% year-on-year (see Expansion and Challenges 2013–2020 for details). The UK faces new regulatory frameworks for buy now, pay later services, with implementation expected in mid-2026. In 2015, Klarna entered the , marking its first major non-European expansion and targeting the rapidly growing sector there. The US has become Klarna's primary revenue driver, with the largest user base exceeding 43 million active users and recent quarterly revenue growth surpassing 50%. The company secured a Swedish in 2017, enabling it to offer deposit accounts and further diversify services internationally. By 2022, Klarna extended its Pay Now option—allowing immediate payments with rewards—to nine additional markets including , , , , , , , and , alongside launching a rewards program that grew to over 4 million members in the and . In June 2023, Klarna launched services in Romania, followed by entry into Hungary in October 2023, as part of expansions into Central and Eastern Europe. Operations now cover more than 45 countries, with active presence in key regions like the (e.g., , , , , , , , , ), the , , , and (entered in 2021 as part of its Asia-Pacific expansion alongside Australia), supported by integrations with platforms like in over 20 European countries. In Italy and France, Klarna has focused on competing with local buy now, pay later providers such as Scalapay and Alma. Strategic partnerships have accelerated Klarna's global footprint. In January 2025, a deal with Stripe enabled Klarna's options for merchants in 26 countries, facilitating access to millions of additional consumers without direct market entry. Similarly, an October 2024 agreement with Zoom introduced flexible payments for subscriptions in 16 markets, including Pay Later in the and Pay Now elsewhere. Recent initiatives include a multi-year forward flow agreement with in August 2025 to offload up to $26 billion in Pay in 4 loans, freeing capital for American expansion, and deepened collaborations with (April 2025) for flexible shopping and (August 2024) for global travel payments. In September 2025, Klarna rolled out a debit card across 10 European countries (, , , , , , , , , ) to integrate everyday spending, with plans for further international rollout. These moves, combined with over 100,000 new merchant partners added since August 2023, underscore Klarna's emphasis on scalable, partnership-driven growth amid competitive pressures in .

Executive Team and Workforce Dynamics

Executive Team

Sebastian Siemiatkowski co-founded Klarna in 2005. He has served as a member of the board of directors and chief executive officer since February 2005. He guided its expansion into a global buy-now-pay-later provider. Siemiatkowski holds an M.Sc. in Economics and Business from the Stockholm School of Economics. He served as an advisory board member of SSE Business Lab, the startup incubator of the Stockholm School of Economics, from May 2015 to June 2019. Under his leadership, the executive team has emphasized technological integration and cost efficiencies. Key figures include co-founder and former chief product officer Victor Jacobsson and David Sandström.
RoleName
Chief Executive OfficerSebastian Siemiatkowski
Chief Financial OfficerNiclas Neglén
Chief Product and Design OfficerDavid Fock
Chief Technology OfficerYaron Shaer
Chief Marketing OfficerDavid Sandström
Chief Commercial OfficerDavid Sykes
Chief Operating OfficerCamilla Giesecke
Chief Risk OfficerJoachim Reuss
Chief Compliance Officer (interim)Joseph Arnold
Chief Credit Risk OfficerArvind Varadhan
Chief Legal OfficerBoudien Moerman
Chief Information Security OfficerHarjyot Lidher

Board of Directors

The , chaired by investor , includes the following members: Roger W. Ferguson Jr. has served as a member since May 2021. He has been a partner and the chief investment officer and chairman of the Investment Committee of Red Cell Partners, an incubation and venture capital enterprise focused on the healthcare and defense sectors, since August 2022. He served as the president and chief executive officer of TIAA, a financial services company, from April 2008 to April 2021. From 2006 to 2008, he served as the chairman of Swiss Re America Holding Corporation, head of financial services and a member of the executive committee of Swiss Re, a global reinsurance company. He was a member of the Board of Governors of the U.S. Federal Reserve System from 1997 to 2006 and served as its vice chairman from 1999 to 2006. He worked as an associate and partner at McKinsey & Company, a global management consulting firm, from 1984 to 1997. He began his career as an attorney at the New York City office of Davis Polk & Wardwell LLP. In addition to Klarna's board, Mr. Ferguson has served as a member of the boards of directors of Alphabet Inc., a multinational technology conglomerate, since June 2016, where he serves as chair of the audit committee; International Flavors & Fragrances, Inc., a creator of flavors and fragrances, since April 2010, where he serves as chair of the board of directors; and Corning Incorporated, a manufacturing company, since 2021. Lise Kaae has served as a member of the board of directors since December 2020. She has served as the chief executive officer of Heartland A/S, a holding and investment company, since August 2017. Ms. Kaae previously served as the chief financial officer of Bestseller A/S, a fashion company, from May 2008 to July 2017. Prior to that, she worked in various roles at entities affiliated with PricewaterhouseCoopers International Limited, an accounting firm, from August 1992 to April 2008, most recently as a partner. In addition to Klarna's board of directors, Ms. Kaae has served as a member of the boards of directors of Novonesis A/S, an international biotechnology company, since March 2024, of Bestseller A/S, since November 2017, of Normal A/S, a Danish retail chain, since October 2014, and of VKR Holding A/S, a holding company, since March 2020. She currently serves as a managing director and/or member of the board of directors of several subsidiaries within, and affiliates of, the Heartland group. She holds an MSc in Business Economics and Auditing from the Aarhus School of Business. Omid R. Kordestani has served as a member of Klarna's board of directors since December 2020. He previously served as the executive chairman of Twitter, Inc. (now X Corp.), a social networking company, from October 2015 to June 2020, and as a member of its board of directors until October 2022. Prior to that, he worked in various leadership roles at Alphabet Inc., a multinational technology conglomerate, from May 1999 to April 2009 and then again from August 2014 to October 2015, most recently as a special advisor to the chief executive officer and the company’s founders. In addition to Klarna's board of directors, Mr. Kordestani has served as a member of the board of directors of Pearson, plc, a learning company, since April 2022, and as its chairman since May 2022. He holds a B.S. from San Jose State University and an M.B.A. with a focus on Organizational Leadership from Stanford University. Sarah Smith has served as a member of the board of directors since December 2020. She previously worked at The Goldman Sachs Group, Inc., a global financial firm, joining in 1996 and being named a managing director in 1998 and a partner in 2002. During her tenure, Ms. Smith served as the controller and chief accounting officer of the firm until 2017 and subsequently as the chief compliance officer from 2017 to 2020. She then served as a senior advisor to Goldman Sachs from 2020 until her retirement in 2021. In addition to Klarna's board of directors, Ms. Smith has served as a member of the board of directors of Aon plc, a global insurance company, since April 2023, and several private companies, including Via Transportation, Inc., a re-engineering public transit company, since June 2021, and 98point6 Inc., a healthcare software company, from February 2021 to March 2024. She has also served as a member of the board of trustees of the Financial Accounting Foundation, the parent organization of the Financial Accounting Standards Board and the Governmental Accounting Standards Board, since January 2021, and as a trustee of the Nuveen Churchill Private Capital Income Fund since April 2022. Ms. Smith holds a Dip. in Accounting from the City of London University and is a fellow of the Institute of Chartered Accountants in England and Wales. Andrew Reed has served as a member of Klarna's board of directors since March 2024. Mr. Reed is a Partner at Sequoia Capital, a venture capital firm, which he joined in February 2014. In addition to Klarna's board of directors, Mr. Reed has served as a member of the board of directors of several private companies, including Vanta Inc., a security and compliance automation company, since April 2021, Bolt Technology OÜ, a mobility and delivery company, since January 2022, Figma, Inc., a design platform, since February 2024, and Strava, Inc., a social networking company for athletes, since November 2023. He holds a B.A. in Economics and Classics from Amherst College. It saw additions in 2025, including Niclas Neglén, Klarna's Chief Financial Officer (CFO) since March 2021 and board member since February 2025. From April 2016 to March 2021, he held various leadership positions at HSBC Private Bank, the private banking business of the HSBC Group, including as chief operating officer for the EMEA region. Prior to that, from January 2003 to April 2016, he served in various roles at GE Capital, a financial services company, including as chief financial officer of its U.K. business. He holds an M.Sc. in Economics and Business Administration from the Stockholm School of Economics. , CEO of Bolt Technology OÜ (“Bolt”), a mobility and delivery company he founded in 2013—prior to which he studied computer science at the University of Tartu—was appointed in February. Mati Staniszewski (co-founder and CEO of ElevenLabs) was appointed in May. These appointments reflect strategic reinforcements amid preparations for public listing.

Workforce Dynamics

Klarna's workforce underwent significant contraction from 5,527 full-time employees at the end of 2022 to 4,352 in 2023 and 3,422 by the end of 2024, a roughly 38% reduction. This downsizing included a 10% in May 2022 affecting approximately 700 roles amid economic pressures in the sector. Subsequent reductions were largely attributed to implementations. AI handled the workload of 700 agents by early 2024. This enabled slower hiring, attrition, and a hiring freeze rather than additional mass terminations. CEO Siemiatkowski stated in 2025 that AI had effectively halved the workforce from a peak of around 7,400 to 3,000 without further layoffs. This allowed reallocation toward higher-value tasks. Despite the workforce reduction, Klarna increased average employee compensation by 60% over three years, from $126,000 in 2022 to $203,000 in 2025. It reinvested efficiency gains from AI implementation into remaining staff compensation. Workforce composition shifted toward technical expertise. The proportion of tech employees rose from 36% in 2022 to 52% by the first quarter of 2025. This supports AI-driven operations and product development. Company culture promotes autonomy, flexibility, and cross-functional collaboration over hierarchical management. Employee satisfaction metrics are mixed: 91% rated it positively in a Great Place to Work survey. This contrasts with a 3.0/5 Glassdoor score where only 36% would recommend it to a friend. In September 2025, Klarna curtailed fully remote work policies—adopted in 2022—mandating more office presence. This counters talent attrition to competitors favoring in-person models.

Controversies and Regulatory Scrutiny

Consumer Protection and Delinquency Issues

Klarna has faced scrutiny over delinquency rates in its buy-now-pay-later (BNPL) loans, with credit losses rising 17% to $136 million in Q1 2025 compared to the prior year, amid broader pressures. Despite this uptick, the company's global BNPL delinquency rate improved to 0.89% in Q2 2025 from 1.03% in Q2 2024, which is notably lower than the traditional credit card delinquency rates reported by the Federal Reserve (typically 2-3%), reflecting better consumer financial health in some metrics. This low rate is largely attributable to the predominance of short-term, interest-free options like Pay in 4, which accounts for over 90% of U.S. purchases, with overall default rates under 1%. However, analysts have highlighted persistent risks, noting that BNPL users, including Klarna's, exhibit higher late payment rates—41% reported at least one late payment in 2025, up from 34% in 2024—potentially exacerbating over-indebtedness for vulnerable borrowers. Consumer complaints against Klarna often center on payment difficulties, misleading credit limits, and aggressive practices. The U.S. (CFPB) received complaints alleging of higher credit availability than approved, with users reporting unexpected denials after purchases. In 2023, the CFPB logged around 40 complaints related to Klarna's personal loans, primarily concerning payment processing and disputes. users have escalated issues to the , including cases where accounts were terminated and debts sold to collection agencies, resulting in charges exceeding £3,600 in fees and interest. Regulatory actions underscore consumer protection gaps in Klarna's operations. Sweden's Financial Supervisory Authority fined Klarna $46 million in December 2024 for deficiencies in anti-money laundering controls, which indirectly heightened risks of unauthorized transactions affecting consumers. In June 2025, Norway's Consumer Council reported Klarna to the Consumer Authority for failing to clearly disclose interest on BNPL loans, violating transparency rules. These incidents, alongside BNPL's lighter regulatory oversight compared to traditional credit—where defaults average 2% for BNPL versus 10% for other —have prompted calls for stricter credit checks to mitigate delinquency and overextension risks. Klarna has responded by beginning to report customer debts to credit agencies in 2025, aiming to encourage responsible borrowing.

Privacy, Data Use, and E-commerce Risks

Klarna has faced regulatory scrutiny over its compliance with the European Union's General Data Protection Regulation (GDPR), particularly regarding transparency in data handling. In March 2024, a Swedish court imposed a fine of 7.5 million Swedish kronor (approximately $733,000) on Klarna for failing to provide sufficient information to customers about the storage, protection, and transfer of personal data outside the EU, violating GDPR Article 13 requirements on controller information obligations. The ruling stemmed from Klarna's privacy notices lacking details on data retention periods and international transfers, which the court deemed inadequate for informing users about processing risks. Data security incidents have further highlighted vulnerabilities in Klarna's systems. In May 2021, a breach allowed some users to access other individuals' account , including order histories and personal details, prompting an investigation by Sweden's financial watchdog. Klarna attributed the issue to a third-party flaw but confirmed no financial was compromised; however, the incident exposed weaknesses in user isolation during e-commerce sessions. Separately, in early 2023, an autofill error enabled users to view third-party such as addresses and by entering minimal identifiers like postcode and , raising concerns over improper segregation in . Klarna's data use practices involve collecting extensive personal and transactional information for scoring, detection, and in its buy-now-pay-later model. The company processes data on purchase behaviors, device identifiers, and financial histories to assess creditworthiness in real-time during checkouts, but this has drawn for potential overreach without explicit granularity. In a 2022 GDPR investigation, the Swedish Authority for Privacy Protection reprimanded Klarna for delaying requests and misinterpreting subject access requests, finding violations of Articles 12, 15, and 17 on timely responses and data minimization. Merchants integrating Klarna are prohibited from sharing sensitive , such as health-related purchases, to avoid categorizing it as special category data under GDPR Article 9. E-commerce risks amplified by Klarna's operations include heightened exposure to and due to deferred payments, which can facilitate anonymous transactions. In December 2024, Sweden's Financial Supervisory Authority fined Klarna 500 million Swedish kronor (about $46 million) for anti-money laundering breaches, citing deficiencies in risk assessments and customer that could enable illicit flows. These lapses involved inadequate monitoring of high-risk merchants and transactions, increasing systemic risks in the BNPL ecosystem where between platforms and retailers heightens breach propagation potential. Despite for payment details, broader risks persist from data aggregation across global markets, with users advised to enable two-factor to mitigate and unauthorized access during online purchases.

AI Implementation and Employment Practices

In February 2024, Klarna deployed an AI-powered virtual assistant, developed in partnership with OpenAI, to handle customer service inquiries across its operations in 23 markets and over 35 languages. The assistant processed 2.3 million conversations in its first month, managing two-thirds of all customer chats and performing the equivalent workload of 700 full-time human agents, while reducing average resolution times to under two minutes from an industry average of 11 minutes. This implementation automated approximately 70% of support tasks, including query resolution and root-cause analysis, leveraging technologies like LangGraph and LangSmith for enhanced efficiency. The AI rollout contributed to substantial workforce reductions, with CEO Sebastian Siemiatkowski stating in May 2025 that artificial intelligence enabled Klarna to shrink its headcount by about 40% since 2022, bringing employee numbers down from 7,400 to roughly 3,000. These cuts, part of broader operational streamlining, yielded annual profit improvements of approximately $40 million from the AI assistant's customer service efficiencies, though earlier 2022 layoffs of around 700 staff predated the heaviest AI integration. Siemiatkowski attributed the reductions to AI's ability to handle repetitive tasks, warning in October 2025 that similar displacements could lead to mass unemployment as other firms understate AI's labor market effects. By mid-2025, Klarna encountered challenges with the AI's performance, including quality shortfalls and rising customer complaints, prompting a shift toward a hybrid model. The company began reassigning internal workers to support roles and piloting remote human agents to supplement the AI, acknowledging that excessive cost-cutting had undermined service standards. Despite these adjustments, AI remains integral to operations, with expansions into personalized shopping recommendations via a October 2025 Google Cloud partnership and internal productivity tools. This evolution reflects AI's role in driving efficiency gains but highlights limitations in empathy-driven interactions, leading to selective rehiring amid ongoing tech investments.

Economic and Societal Impact

Innovations and Market Disruptions

Klarna's core innovation lies in its buy-now-pay-later (BNPL) model, launched in in 2005, which enables consumers to defer payments in interest-free installments while providing immediate full payment to merchants. This approach minimizes checkout friction compared to traditional cards or loans, which often require lengthy approvals and incur interest charges, thereby accelerating transaction completion and boosting conversion rates by up to 30% for partnering retailers. By and assuming directly rather than relying on third-party lenders, Klarna maintains control over lending decisions, using alternative data for real-time assessments that extend access to short-term for demographics underserved by conventional banks. The company's technological advancements have further embedded BNPL into digital retail ecosystems. Klarna's one-click payment integration, rolled out across platforms like and by the early 2010s, streamlined the purchasing process, reducing cart abandonment—a persistent issue in where abandonment rates averaged 70% industry-wide. Its mobile app, evolving into a "super app" by 2023, incorporates AI-driven features such as personalized product recommendations, , and brand comparisons, launched in expanded form on October 24, 2024, to create a unified shopping destination that rivals generalist sites. These tools leverage on transaction to predict preferences, enhancing discovery and retention without merchant-side burdens. In operations, Klarna's aggressive AI adoption since 2022 has disrupted internal efficiencies and paradigms. Integration of OpenAI's into its AI Assistant by December 2024 handles two-thirds of customer inquiries, enabling workforce reductions of 40% in service roles while maintaining response times under 2 minutes—outpacing human agents in scalability during peak volumes. This shift positions Klarna as an AI-first financial entity, with CEO outlining in June 2024 a vision for restructuring around generative AI to automate , detection, and compliance, potentially lowering operational costs by 25% annually. Market-wise, Klarna commands over 50% of the global BNPL sector as of 2023, fueling explosive growth that pressured legacy payment processors and banks by capturing share from credit cards in point-of-sale financing. The model's post-2020 surge, driven by pandemic-induced e-commerce shifts, disrupted retail banking by introducing flexible, no-interest alternatives that increased average order values by 45% for users while challenging incumbents' fee structures. However, this expansion has compelled regulatory adaptations, as seen in the U.S. Consumer Financial Protection Bureau's 2024 scrutiny of BNPL underwriting practices, highlighting tensions between innovation speed and systemic risk in consumer credit.

Criticisms, Risks, and Broader Implications

Klarna's buy-now-pay-later (BNPL) model has drawn criticism for potentially fostering impulsive purchasing and accumulating that users perceive as less burdensome than traditional , leading to higher overall spending without corresponding savings. A study found that BNPL adoption increases average customer spending by 6.42% online, often on non-essential items, exacerbating and impulsive behaviors among users. Critics, including financial advisors, argue this structure normalizes deferred payments for everyday expenses like groceries—25% of users in a 2025 survey cited this use, up from 14% in 2024—potentially trapping lower-income or financially fragile consumers in cycles of late fees, overdraft charges, and damage when payments are missed or reported to bureaus. Risks to consumers are amplified by the lack of comprehensive credit reporting for most BNPL loans, obscuring total loads and delaying interventions for overextension; the (CFPB) highlighted in 2025 that BNPL users often exhibit riskier credit profiles and higher unsecured levels compared to non-users. For Klarna specifically, while the company reported a global BNPL delinquency rate of 0.89% in Q2 2025—down from 1.03% in Q2 2024— and economic pressures have led to struggles with repayments, contributing to operational losses. Broader industry data indicates 34-41% of BNPL users miss payments, raising concerns about hidden defaults not fully captured in provider metrics. Societally, BNPL services like Klarna's expand access to for or subprime borrowers but may undermine long-term and stability by prioritizing convenience over affordability assessments, with 15% of Americans using BNPL in 2024 versus 12% in 2022. This trend could elevate systemic risks if widespread delinquencies materialize during downturns, echoing concerns from analyses about BNPL's role in inflating without traditional safeguards. Implications include heightened regulatory scrutiny—such as CFPB warnings on consumer harm—and a shift toward viewing BNPL as "shadow credit" that boosts retail sales short-term but risks broader economic fragility if debt accumulation outpaces income growth.

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