{"id":5958,"date":"2021-02-10T20:23:17","date_gmt":"2021-02-10T14:53:17","guid":{"rendered":"https:\/\/www.ncrypted.net\/blog\/?p=5958"},"modified":"2025-11-27T18:59:26","modified_gmt":"2025-11-27T13:29:26","slug":"how-does-klarna-work","status":"publish","type":"post","link":"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/","title":{"rendered":"How Does Klarna Make Money?"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"644\" height=\"330\" src=\"https:\/\/www.ncrypted.net\/blog\/wp-content\/uploads\/2021\/02\/how-does-klarna-work-blog-img-644x330.jpg\" alt=\"How does Klarna Make Money\" class=\"wp-image-5959\" srcset=\"https:\/\/www.ncrypted.net\/blog\/wp-content\/uploads\/2021\/02\/how-does-klarna-work-blog-img-644x330.jpg 644w, https:\/\/www.ncrypted.net\/blog\/wp-content\/uploads\/2021\/02\/how-does-klarna-work-blog-img-300x154.jpg 300w, https:\/\/www.ncrypted.net\/blog\/wp-content\/uploads\/2021\/02\/how-does-klarna-work-blog-img-768x394.jpg 768w, https:\/\/www.ncrypted.net\/blog\/wp-content\/uploads\/2021\/02\/how-does-klarna-work-blog-img-778x400.jpg 778w, https:\/\/www.ncrypted.net\/blog\/wp-content\/uploads\/2021\/02\/how-does-klarna-work-blog-img.jpg 780w\" sizes=\"auto, (max-width: 644px) 100vw, 644px\" \/><figcaption class=\"wp-element-caption\">How does Klarna Make Money<\/figcaption><\/figure>\n\n\n\n<p>The prime key to the success of any innovation is an idea that has never been done before. <a href=\"https:\/\/www.klarna.com\" data-type=\"link\" data-id=\"https:\/\/www.klarna.com\" target=\"_blank\" rel=\"noreferrer noopener\">Klarna<\/a>, a financial technology company, is one such example. It is a Swedish fintech that offers online payment services such as payments for online stores, direct payments, post-purchase payments, and much more. Their core service lies in the fact that the company assumes the stores\u2019 requests for payments and handles customer payments, which eliminates the financial risk on both the buyers\u2019 and the sellers\u2019 end. This particular article shares a few insights for the two most commonly associated queries about Klarna, i.e., \u201cHow does Klarna work?\u201d and \u201cHow does Klarna make money\u201d.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#klarna-business-model\" >Klarna Business Model<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#who-are-klarnas-investors\" >Who are Klarna\u2019s investors?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#how-does-klarna-work\" >How does Klarna work?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#buy-now-pay-later-option\" >Buy now, pay later option<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#how-does-klarna-work-for-customers\" >How does Klarna work for customers?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#how-does-klarna-charge-money\" >How does Klarna charge money?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#klarna-the-beginning\" >Klarna- The beginning<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#the-global-expansion-of-klarna\" >The global expansion of Klarna<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#how-does-klarna-make-money\" >How does Klarna Make Money?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#how-does-klarna-work-for-its-future-development\" >How does Klarna work for its future development?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.ncrypted.net\/blog\/how-does-klarna-work\/#how-to-launch-your-own-business-similar-to-klarna\" >How to Launch Your Own Business Similar to Klarna?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"klarna-business-model\"><\/span>Klarna Business Model<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Klarna\u2019s uniqueness lies in the fact that the company offers innovative payment and shopping solutions to customers and merchants online and in-store. Klarna was launched in 2005, and in 2017, it turned into a fully licensed bank. In 2019, Klarna was active in 17 core markets globally and was holding a post-money valuation of USD 5.5 billion, which helped it rank as the largest private fintech company in Europe and one of the largest private fintech companies globally. Despite this huge achievement, the company is yet to look to explore new innovative solutions to achieve greater heights.<\/p>\n\n\n\n<p>Before discussing \u201cHow Klarna makes money?\u201d, it is essential to know about its <a href=\"https:\/\/www.ncrypted.net\/blog\/top-7-revenue-and-business-models-for-internet-startups\/\">business model<\/a> and how Klarna creates value for its customers.<\/p>\n\n\n\n<p>Klarna is widely used by two groups: <a href=\"https:\/\/www.ncrypted.net\/blog\/how-does-ecommerce-work-insights-into-ecommerce-business-model-and-revenue-model-of-ecommerce-industry\/\" data-type=\"post\" data-id=\"2964\">e-commerce<\/a> merchants and online shoppers.<\/p>\n\n\n\n<p>On one hand, the merchants use Klarna to gain customers and enhance their online payment options for customers looking for flexible payment options.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"who-are-klarnas-investors\"><\/span>Who are Klarna\u2019s investors?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As per the report published by<a href=\"https:\/\/www.crunchbase.com\/organization\/klarna\/company_financials\" rel=\"nofollow noopener\" target=\"_blank\"> CrunchBase<\/a>, Klarna has successfully raised $2.1 billion in funding in 22 funding rounds. Right now, the company is being funded by a total of 42 investors. Macy\u2019s and TCV are the latest Klarna investors, with one exit of Wrapp. It has acquired seven organizations so far.<\/p>\n\n\n\n<p>Klarna\u2019s Annual Report 2019 also revealed that the company is the most preferred payment provider among the top 100 highest-grossing merchants in the United States. Some of its partners include H&amp;M, Adidas, IKEA, Zara, Expedia Group, Samsung, ASOS, Peloton, Abercrombie &amp; Fitch, Nike, and AliExpress, among many others.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-does-klarna-work\"><\/span>How does Klarna work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Klarna aims to change the traditional way of online payments by offering a \u201cbuy now, pay later\u201d service that allows online shoppers to purchase from major retailers without paying anything in advance. They partner with retailers all over the world and offer the customer a flexible online payment option.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"buy-now-pay-later-option\"><\/span>Buy now, pay later option<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Klarna offers amazing payment plans to its customers. There are millions of people who have benefited from Klarna&#8217;s flexible payment options. It easily allows customers to make any purchase in smaller payments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-does-klarna-work-for-customers\"><\/span><b>How does Klarna work for customers?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Klarna simplifies and speeds up the payment procedure of the customer by implementing the above-mentioned BNPL (Buy Now Pay Later) options.<\/p>\n\n\n\n<p>Below\nare the perks of using Klarna for shopping:<\/p>\n\n\n\n<p>\u25cf&nbsp; &nbsp;&nbsp; The payment options offered by the company are instant, flexible,\nand secure.<\/p>\n\n\n\n<p>\u25cf\u00a0 \u00a0\u00a0 Customers can make payments after the delivery within a period of 30 days.<\/p>\n\n\n\n<p>\u25cf&nbsp; &nbsp;&nbsp; Klarna offers instant access to all credits.<\/p>\n\n\n\n<p>\u25cf&nbsp; &nbsp; &nbsp; The BNPL options allow customers to make the payments at their convenience.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-does-klarna-charge-money\"><\/span>How does Klarna charge money?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As already mentioned, Klarna offers flexible payment options that are built for modern online shoppers. To answer the question, \u201cHow does Klarna charge money?\u201d let\u2019s move a step further. Here are the various payment options that it provides. This is the unique and secret ingredient of the company\u2019s success.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Pay in 4 interest-free installments<\/li>\n<\/ul>\n\n\n\n<p>This option gives the customer complete freedom to spread the cost interest-free over time. The retailers get paid immediately by the company, while the customers get a flexible plan.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Pay in 30 days<\/li>\n<\/ul>\n\n\n\n<p>This option allows the customers to try the purchased product before they buy that particular product. It offers 30 days to complete that payment, and the best part is that: \u201cit&#8217;s fee-less\u201d.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Pay within the next 36 months<\/li>\n<\/ul>\n\n\n\n<p>This flexible payment option allows the customer to buy the product now and spread the cost of that product with monthly payments that last up to 36 months.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"klarna-the-beginning\"><\/span>Klarna- The beginning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Klarna was founded by Sebastian Siemi\u0105tkowski, Niklas Adalberth, and Victor Jacobsson. The three of them participated in the Stockholm School of Economics annual entrepreneurship award in 2005, and that was the place where they presented their idea on providing safer and simpler online shopping methods to the customers and merchants. At that time, no one paid much heed to their idea.<\/p>\n\n\n\n<p>Despite their failure in the competition, they decided to start with Klarna in Sweden in mid-2005. The amazing initiation of the company made many players wonder \u201cHow does Klarna work?\u201d and \u201cHow does Klarna make money?\u201d Are you one of those eager ones? Keep reading further to get your answers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"the-global-expansion-of-klarna\"><\/span>The global expansion of Klarna <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In a matter of 15 years, the company has grown extensively with 200,000 merchant partners across 17 countries. Klarna, in its annual report 2019, claims that in 2019, Klarna became the fastest-growing shopping destination with more than 85 million customers. However, the recent update on the company\u2019s official page reveals that Klarna is now one of Europe\u2019s largest banks and is currently providing payment solutions to 90 million consumers out there.<\/p>\n\n\n\n<p>In<a href=\"https:\/\/www.klarna.com\/international\/press\/klarna-announces-460m-equity-raise-to-further-support-massive-us-growth\/\" rel=\"nofollow noopener\" target=\"_blank\"> August 2019<\/a>, Klarna successfully raised $460 million in an equity <a href=\"https:\/\/www.startupguru.co\/blog\/startup-funding-stages\/\" data-type=\"link\" data-id=\"https:\/\/www.startupguru.co\/blog\/startup-funding-stages\/\" target=\"_blank\" rel=\"noreferrer noopener\">funding<\/a> round at a post-money valuation of $5.5 billion. Their gross merchandise value grew by 32% in 2019, and operating revenue climbed 31% mark to reach $753 million.<\/p>\n\n\n\n<p>Back in 2014, Klarna launched its offices in Columbus, Ohio, where its North American headquarters is based. Here is the list of Klarna\u2019s company locations:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>European offices: Amsterdam, Berlin, Brussels, Gieben, Helsinki, London, Madrid, Milan, Munich, Oslo, Stockholm, Vienna<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>American offices: Columbus, Los Angeles, New York<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Other offices: Sydney, working abroad<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-does-klarna-make-money\"><\/span>How does Klarna Make Money?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Klarna does not charge any fees for\nchoosing any of its payment options then How does Klarna work to earn?<\/p>\n\n\n\n<p>It\u2019s true that it does not charge customers for making any purchase, but instead, it charges retailers a transaction fee for all payment options. Klarna charges $0.30 as a transaction fee and an additional variable fee of up to 5.99%. In addition to this, Klarna cuts a percentage off of each sale a business makes.<\/p>\n\n\n\n<p>Klarna\nbelieves retailers are willing to pay these fees because its services help to\nincrease sales. It estimates that the ability for consumers to pay on\ninstallment boosts their average order value by 45%. Consumers who use the\n30-day payment option have a 20% higher purchase frequency. Those financing\ntheir purchases tend to spend 58% more on average.<\/p>\n\n\n\n<p>Klarna is encouraging loads of referrals and traffic from consumers each month. Consumers are actively looking for their preferred retailers partnered with Klarna so that they can benefit from the flexible payment facilities. As already discussed, Klarna generates funds from both merchants and end consumers. In addition to this, the company successfully generates a good amount of revenue through affiliate services.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-does-klarna-work-for-its-future-development\"><\/span>How does Klarna work for its future development?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Till now, you might have got the answer to \u201cHow does Klarna work? and \u201cHow does Klarna make money?\u201d, but now it\u2019s time to answer \u201cHow does Klarna work for its future development?\u201d Klarna\u2019s Annual Report 2019 mentions that the company\u2019s future development continues to enhance the safe, secure, and smooth experience, supporting merchant growth and driving consumer loyalty by offering flexible payment options. These flexible payment options themselves answer \u201cHow does Klarna work?\u201d They not only allow the customers to adjust their payment for any product but also let them control their payments so that they spend less time managing their finances.<\/p>\n\n\n\n<p>From the report, it is evident that the brand is getting a strong momentum from US consumers through in-app shopping. The company mentions that it will continue to grow further by expanding into multiple new markets in countries including Australia and New Zealand.<\/p>\n\n\n\n<p>On 17 November 2020, Klarna announced the launch of its new initiative called Klarna Future Shopping Lab. The company mentions that in their first project, they are exploring the future of the mailbox. Their aim is to transform the mailbox into a modular platform for future e-commerce, distribution, returns, and shoppable neighborhoods. Klarna Future Shopping Lab is basically an ongoing research project of that company that explores some unrealistic ways to improve their customers\u2019 shopping experiences. In the article published by the company itself, they talk about the extinction of the era of mailboxes, which has now been replaced by digital communication. They are aiming for the revival of revolutionized mailboxes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"how-to-launch-your-own-business-similar-to-klarna\"><\/span>How to Launch Your Own Business Similar to Klarna?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\">If you\u2019re willing to\u00a0<a href=\"https:\/\/www.ncrypted.net\/ecommerce-web-development\" target=\"_blank\" rel=\"noopener\">start your own online e-commerce web platform<\/a>\u00a0similar to Klarna, get in touch with our domain expert team to discuss your requirements and provide you with our no-obligation offer for your own BNPL venture.<\/span> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Klarna has revolutionzed the Buy-Now-Pay-Later shopping experience for e-commerce buyers worldwide. In this article, we understand its business model and how does Klarna make money.<\/p>\n","protected":false},"author":535,"featured_media":5959,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[496,1685],"tags":[306,1687,307],"class_list":{"0":"post-5958","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-models","8":"category-fintech","9":"tag-business-model","10":"tag-klarna","11":"tag-revenue-model"},"_links":{"self":[{"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/posts\/5958","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/users\/535"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/comments?post=5958"}],"version-history":[{"count":2,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/posts\/5958\/revisions"}],"predecessor-version":[{"id":25744,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/posts\/5958\/revisions\/25744"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/media\/5959"}],"wp:attachment":[{"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/media?parent=5958"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/categories?post=5958"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ncrypted.net\/blog\/wp-json\/wp\/v2\/tags?post=5958"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}