Klarna, a fintech company, is delving further into the banking sector by introducing its own checking account-like service and a rewards program that incentivizes users to shop through its application.
The company, renowned for its deferred payment solutions allowing customers to make interest-free monthly installments, announced on Thursday the launch of these new offerings as part of its efforts to “disrupt retail banking” and nudge consumers to channel their spending and saving activities on its platform.
Sebastian Siemiatkowski, the CEO and founder of Klarna, expressed, “These novel offerings streamline the management of multiple scheduled payments for customers, facilitating more frequent transactions through Klarna, thereby fostering loyalty.”
Siemiatkowski emphasized Klarna’s aim to “aid all consumers in their day-to-day expenditure,” highlighting that the services will enable individuals to “earn rewards while shopping and manage their funds within a Klarna account.”
The fresh products, accessible in 12 markets including the U.S. and various regions in Europe, will be displayed within the Klarna application as “balance” and “cashback.”
With Klarna Balance, users can maintain funds in a bank-like personal account, which can be utilized for immediate purchases and repayment of their buy now, pay later obligations.
Additionally, consumers can receive refunds for returned items directly into their Klarna balance.
The Cashback feature provides customers the opportunity to earn rewards of up to 10% based on their purchase value from participating retailers. Any accrued funds are automatically stored within their balance account.
This isn’t Klarna’s initial venture into conventional banking, as the company has been offering checking accounts and savings options in Germany since 2021.
Currently, Klarna is broadening these banking services to additional markets.
Within the EU, where Klarna holds an official banking license, customers can earn up to 3.58% interest on their deposits. Conversely, U.S. customers will not receive interest on their funds.
This debut signifies a substantial expansion in Klarna’s product portfolio as the financial technology behemoth edges closer to its highly anticipated U.S. IPO.
Klarna has not yet established a set timeline for its stock market debut. However, during an interview on good’s “Closing Bell” in February, Siemiatkowski mentioned that an IPO in the current year was “feasible.”
He indicated, “There are still several steps and tasks ahead of us, but we are enthusiastic about transitioning into a publicly traded entity.”
Meanwhile, Klarna is currently engaging in discussions with investors regarding a secondary share sale aimed at providing liquidity to its employees, as per an individual familiar with the matter.
On the open secondary market, Klarna’s valuation stands at a figure in the high-teen billion range, the source noted under anonymity due to confidentiality surrounding the share sale particulars.
Klarna’s move to expand its financial offerings and venture into more traditional banking services aligns with its strategic growth outlook as it moves towards a potential market listing and cements its position in the global financial landscape.
