How Klarna Makes Money

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Klarna is a ‘Buy Now, Pay Later’ (BNPL) service that allows consumers to pay for goods and services over the course of multiple installments. 

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Over 150 million consumers have used Klarna across 450,000 merchants, thus making it the most popular BNPL service out there. 

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Klarna was founded in 2005 by Sebastian Siemiatkowski, Victor Jacobsson, and Niklas Adalberth after they won a business competition hosted by their university. 

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They have since gone on to raise a whopping $4.5 billion in funding for Klarna, which amassed a valuation of $45 billion during its peak. 

The firm has also attracted criticism from consumer advocacy groups for promoting reckless financial behavior and pushing users into further debt. 

In 2021, Klarna generated $1.38 billion in revenue. But how does the company actually make money?

Merchant Fees

Merchants are charged $0.30 plus commission for every transaction they record. The commission itself ranges from 3.29% to 5.99%.

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Customers who miss their installments are charged penalty fees of up to $9.

Late Payments

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Interchange

Klarna offers a debit card that can be used to pay at selected stores. It collects interchange fees whenever customers use said card. 

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