Swedish fintech company Klarna, well-known for its innovative “buy now, pay later” services, is expanding its offerings with the introduction of a new Visa debit card. This strategic move is indicative of Klarna’s intention to broaden its business scope beyond just short-term credit products.
On Tuesday, Klarna announced that it is piloting its new product, termed Klarna Card, with select customers across the U.S., with plans for a nationwide rollout expected soon. Additionally, the company confirmed that its debit card will launch in European markets later this year.
This initiative is part of Klarna’s overarching strategy to reshape its public perception ahead of a highly anticipated initial public offering (IPO). The company aims to transition its image from being predominantly associated with buy now, pay later (BNPL) products to being recognized as a comprehensive banking service provider. BNPL products, which allow consumers to repay the total cost of items in a series of interest-free installments, have established Klarna as a major player in the fintech landscape.
“We want Americans to start to associate us with not only buy now, pay later but also with a PayPal wallet-type experience and the neobank offerings that we provide,” stated Klarna CEO Sebastian Siemiatkowski during a recent interview on Finance Newso’s “The Exchange.” He emphasized that while Klarna operates as a neobank to a significant extent, the public still closely ties the brand to its BNPL services.
The new Klarna Card also features an account that can securely hold deposits insured by the Federal Deposit Insurance Corporation (FDIC) and facilitate withdrawals, resembling the functionality of traditional checking accounts provided by established banks.
Importantly, the Klarna Card utilizes Visa Flexible Credential technology, enabling users to manage various funding options—including debit, credit, and BNPL—from a single card. While it defaults as a debit card, customers can switch to Klarna’s “pay later” options like “Pay in 4” or “Pay in 30 Days.”
As Klarna intensifies its presence in the competitive consumer banking sector, it faces stiff competition from giants of the industry such as JPMorgan Chase & Co. and Bank of America, as well as from innovative fintech challengers like Chime, which have successfully garnered a substantial customer base.
Though Klarna holds a full banking license within the European Union, it lacks a dedicated banking license for operations in the United States. Nevertheless, the firm assures customers that it can offer FDIC-insured accounts through a partnership with WebBank, a smaller financial institution located in Salt Lake City, Utah.
