How Does Klarna Make Money?

Instead of initially saving money to make a purchase, Klarna enables people to buy the things they need now and pay over the coming months. But how can they earn money doing this? Let’s look into it…

In 2005, Klarna was established in Stockholm, Sweden. It offers payment solutions to 205,000 businesses in 17 nations. According to the business, its 85 million clients do one million transactions per day.

One of the biggest in Europe, the business works as a bank. Visa and Sequoia Capital are among the investors.

A financial technology firm, Klarna seeks to transform how customers pay for goods online. It provides a “buy now, pay later” option that enables online customers to make purchases from well-known merchants without making any upfront payments.

How Does Klarna Make Money?Pin

Purchases may be made by customers in four payments with interest, due every two weeks, or in full within 30 days. They may also spread out the cost of their purchase over a period of six to 36 months.

But how do Klarna make money by offering this service that doesn’t cost the consumers any additional money?

How Klarna Makes Its Money

There are a few ways that Klarna makes money, including merchant commissions, interest fees, late fees and through its Klarna card.

One of the top retail lenders in the world, Klarna controls 10% of the market in Northern Europe and processes more than 1 million transactions daily.

They now work with more than 200,000 online retail sites worldwide and a further 60,000 in-store at the tills, adding a new merchant every eight minutes on average.

In 17 countries, Klarna now has more than 90 million customers, 12 million of whom use the service on a regular basis, and 55,000 people download the company’s app every day.

Merchant Commissions

With around 5,500 U.S. shops and over 200,000 worldwide, Klarna partners with a new store every eight minutes. Additionally, more than 60,000 retailers use the in-store point of sale system from Klarna.

A portion of the overall sales price, as well as a transaction fee, are earned by Klarna, which processes more than 1 million transactions per day.

Depending on which of the three payment choices their consumers select – 4 payments, pay in 30 days, or financing – Klarna earns a different commission rate.

Interest Fees

Customers of Klarna have access to three different payment methods. They are: finance, 4 payments, and pay in 30 days.

There are two interest-free repayment alternatives available. Depending on your creditworthiness after a mild draw, the financing option costs interest ranging from 0% to 29.99%.

Late Fees

Klarna also generates money from clients who miss their payments by charging late fees to such customers.

If they are not up to date on their payments by the end of the month, Klarna then charges them for each missed payment and also for each missed month.

Klarna Card

The “Pay in 30” offer is precisely what the Klarna Card is but through the use of a card. When you use the card, you may make interest-free payments for purchases up to 30 days following the transaction. Furthermore, there are no late fees. More payment options will be introduced to the card, according to Klarna.

The new Klarna Card may seem like a typical credit card, but it isn’t since you must pay the debt in full within 30 days, there is no interest to pay, and there are no late payment penalties.

How Klarna Works

Numerous top retailing companies are partners with Klarna. When you check out from one of these retailers, you may use Klarna as your form of payment.

On its “Pay in 30 days” and “Pay in 3 instalments” programmes, Klarna does not impose interest in the UK. However, the “Financing” version of the service operates more like a credit card and does levy interest.

For individuals who prefer to pay with Klarna, there are three payment schemes available. Klarna will also provide a “Pay Now” option starting in 2022. The three available choices are as follows:

30-Day Plans

With this credit option, you may finish placing your purchase without making a payment. You will get an invoice when your items are dispatched, and you have up to 30 days to pay the whole amount.

3-Month Plans

You may stretch out the cost of your purchase over a two-month period with this credit option. There is no interest charged and just an affordability assessment is required. Order-related payments are due first, followed by those made 30 and 60 days afterwards.


It is possible to divide your payments into monthly instalments over a period of six to thirty-six months with this authorised financial service. Like a loan or credit card, it is subject to a comprehensive credit check and may have an interest rate; the typical APR as of right now is 18.9%.

You may pick the length of the financing agreement at the checkout, and you’ll be informed of the interest rate that will be charged. Retailers may offer a variety of packages. Each month, you must pay at least the bare minimum.

Paying the “interest-saver” amount that appears on your monthly account will keep you on track to complete your purchase within the originally planned time frame. The Financing selection may have an influence on your credit rating.

The Dangers Of Paying Later

According to research, young customers are becoming more eager to make purchases using credit, therefore Klarna offers its services to them in the hopes that they would want a seamless shopping experience.

According to Klarna’s own statistics, customers who can pay in instalments or with financing tend to spend more, which raises questions about whether the business encourages young customers to accrue more debt than they can manage.

Jake McEvoy

Jake is a professional copywriter, journalist, and life-long fan of technology. He covers news and user guides for KnowYourMobile.

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