How Does Klarna Make Money

Klarna is a popular fintech company that offers a variety of payment and banking services. Founded in 2005 in Sweden, Klarna has quickly become a global player in the financial technology space, with more than 90 million customers and partnerships with more than 250,000 merchants. But how does Klarna make money? In this article, we’ll take a closer look at Klarna’s business model and revenue streams.

Klarna’s Business Model

Klarna’s core business model revolves around offering consumers a convenient and flexible way to pay for their purchases. Klarna partners with online retailers to offer their customers a “buy now, pay later” option that allows them to split their purchase into interest-free installments or defer payment entirely. This service has become increasingly popular in recent years, particularly among younger consumers who are looking for alternative payment options.

To use Klarna’s services, consumers must create a Klarna account and undergo a credit check.

If approved, they can then use Klarna to make purchases online and choose from various payment options, including:

  1. Pay in 30 days

Customers can choose to pay for their purchase in full within 30 days of the purchase date. This option does not charge interest or fees.

  1. Pay in instalments

Customers can choose to split their purchase into four interest-free payments, which are automatically deducted from their bank account every two weeks.

  1. Financing

Customers can choose to finance their purchase over a longer period, typically 6-36 months, with interest rates ranging from 0% to 24.99%.

In addition to its “buy now, pay later” services, Klarna also offers a range of other banking and financial services, including savings accounts, insurance, and credit cards. These services are available in select markets, such as Sweden and Germany, and are designed to provide customers with a more holistic banking experience.

Klarna’s Revenue Streams

Klarna generates revenue in several ways, primarily through transaction fees and interest charges.

  1. Transaction Fees

Klarna charges retailers a transaction fee for each purchase made using its payment services. This fee varies depending on the merchant’s sales volume and the specific services being used. In general, Klarna’s transaction fees range from 3-5% of the purchase price, although this can vary depending on the merchant’s agreement with Klarna.

  1. Interest Charges

Klarna also generates revenue through interest charges on its financing products. Customers who choose to finance their purchases over a longer period are charged interest rates ranging from 0% to 24.99%, depending on their creditworthiness and the specific financing option they choose. Klarna earns a portion of the interest charged to customers, which is how it generates revenue from its financing services.

  1. Other Revenue Streams

In addition to transaction fees and interest charges, Klarna also generates revenue through a variety of other services, including:

Interchange fees: Klarna earns a portion of the interchange fees charged by credit card companies for each transaction processed through its platform.

Late fees: Customers who do not make their payments on time are charged late fees, which generate additional revenue for Klarna.

Merchant fees: Klarna offers additional services to merchants, such as marketing and analytics tools, which are available for a fee.

One potential risk for Klarna is the regulatory environment. As the “buy now, pay later” model has grown in popularity, regulators have become increasingly concerned about the potential for consumer harm. Some countries, such as the UK and Australia, have already introduced new regulations to govern the industry, and it’s possible that other countries may follow suit. Klarna will need to navigate these regulations carefully to avoid any negative impact on its business.

Despite these risks, Klarna’s business model and revenue streams appear to be working well for the company. With a large and growing customer base, partnerships with major retailers, and a range of innovative products and services, Klarna is well-positioned to continue its growth trajectory and remain a key player in the fintech space


Klarna’s “buy now, pay later” services have quickly become popular with consumers and merchants alike. By offering a convenient and flexible way to pay for purchases, Klarna has carved out a niche in the financial technology space and established itself as a major player. Its revenue streams, which include transaction fees, interest charges, and other fees, have allowed it to generate substantial revenue and continue to grow its business. As the fintech industry continues to evolve, it will be interesting to see how Klarna adapts its business model to stay competitive and meet the changing needs of its customers. Klarna’s success is a testament to the growing demand for alternative payment options, particularly among younger consumers who are looking for more flexibility and control over their finances. By offering a range of payment and banking services, Klarna has positioned itself as a one-stop-shop for customers’ financial needs, which has helped it to differentiate itself from other players in the industry.