- Klarna, best known for its buy now and pay later loans, is launching a personal account for deposits and cashback rewards in the US and Europe.
- The move is a sign that Klarna is moving deeper into banking with features that encourage people to shift their spending and savings to the platform.
- This comes as the fintech giant moves ever closer to its highly anticipated IPO in the US.
Financial technology company Klarna is moving deeper into banking with its own checking account-like product and a cashback offer that rewards users for purchases made through the app.
The company – best known for its instant loans that allow consumers to pay for their purchases in interest-free monthly installments – said on Thursday that it aims to “shake up” its retail banking business with the launch of the new products and encourage customers to shift their spending and savings to its platform.
“These new products make it easier for customers to manage multiple scheduled payments, help our customers use Klarna more often for purchases and encourage customer loyalty,” Sebastian Siemiatkowski, CEO and founder of Klarna, told CNBC.
Siemiatkowski said Klarna wants to “support all consumers with their everyday spending”, adding that the products would allow people to “earn money while shopping and manage it in a Klarna account”.
The two new products, which will be launched in 12 markets including the US and across Europe, will appear as “Credit” and “Cashback” in the Klarna app.
Klarna Credit allows users to store money in a bank-like personal account, which they can then use for instant purchases and to repay their Buy Now and Pay Later credits.
Users can also receive refunds for returned items directly to their Klarna balance.
Cashback offers customers the opportunity to receive up to 10% of the value of their purchases at participating retailers as a reward. The money earned is automatically credited to their credit account.
It is not Klarna’s first foray into more traditional banking; the company has been offering checking accounts and savings products in Germany since 2021.
The company is now expanding these banking products to other markets.
Customers in the EU – where Klarna has an official banking license – can earn up to 3.58 percent interest on their deposits. However, customers in the US cannot earn any interest.
The launch represents a significant expansion of Klarna’s product range as the fintech giant moves ever closer to its highly anticipated IPO in the US.
Klarna has not yet set a firm timeline for its IPO, but in an interview with CNBC’s “Closing Bell” in February, Siemiatkowski said an IPO this year was “not impossible.”
“We still have some steps and work ahead of us,” he said. “But we definitely want to become a publicly traded company.”
Meanwhile, Klarna is in talks with investors about a secondary sale of its shares to provide some liquidity to its employees, a person familiar with the matter told CNBC.
Klarna’s valuation on the open secondary market is currently in the high double-digit billion range, said the source, who spoke on condition of anonymity because details of the share sale are not yet public.
