How Klarna Makes Money

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

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

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

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%.

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

Late Payments

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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