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How Does Klarna Make Money? Unraveling The Best Revenue Streams

How Does Klarna Make Money

Klarna is a financial technology (fintech) company that has revolutionized the payment industry by providing new payment solutions to merchants and customers worldwide. 

With its ‘buy-now-pay-later’ model, Klarna allows customers to defer their payment for up to 30 days after their purchase, interest-free. 

They also offer installment payment plans that let customers split a purchase into several payments over a few months. These unique payment options have made Klarna a favorite among many consumers.

But, how does Klarna make money for the company? or how does its business model work?

In this article, we’ll take a closer look at Klarna’s revenue streams and explore how the company has been able to generate revenue year after year.

Klarna: A Brief Overview

Klarna is a Swedish fintech company that was founded in 2005. Since its inception, Klarna has taken the finance industry by storm and has become a leading player in the fintech world. 

Klarna’s primary focus is to offer payment solutions to online businesses and their customers, making online shopping more convenient for consumers.

The company’s payment solutions have been a hit among customers. In fact, Klarna has over 60 million active customers who have made more than 2 million transactions per day. 

Klarna’s unique payment structure has helped the company achieve tremendous growth, with a valuation exceeding 31 billion dollars.


Klarna’s Business Model

Klarna’s business model is centered around providing smooth and seamless payment solutions to its customers. Customers can choose from various payment solutions depending on the merchant they’re buying from. 

Klarna relies on the merchant to pay for the transactions instead of charging the customer any interest.

One of the reasons why Klarna’s business model has been able to succeed is that it eliminates the need for a credit check. If a customer is denied credit, they may then turn away from making purchases from a particular merchant. 

Klarna’s business model has been able to overcome this issue by offering customers interest-free and instant credit checks. This provides an immediate decision on whether or not they can make the purchase.

How Does Klarna Make Money? Klarna’s Revenue Streams

Klarna has multiple revenue streams. The company offers a range of products and services that help to diversify its revenue generation. Here are some of the primary revenue streams for Klarna:

Commission From Merchants

Klarna generates most of its revenue by charging merchants a commission fee for offering Klarna’s payment solutions to their customers. 

This commission fee ranges from 1% to 6% of the transaction value, depending on the merchant’s marketing budget and industry.

Interest Income

Klarna makes money from interest income when a customer chooses to pay for their purchase using Klarna’s financing product. 

This product lets customers break their payment into smaller installments over a set time, typically three to 36 months, depending on the merchant and the purchase amount. 

Interest rates vary from 0% to 24.99%, depending on the customer’s creditworthiness. The higher the consumer’s creditworthiness, the lower the interest rate is.

Klarna earns revenue from interest by charging a fee to merchants who offer Klarna’s financing product to their customers. 

While the customer is not charged any extra fees for the financing product, the interest rate they receive will depend on their creditworthiness.

Card Transactions

Klarna has its own credit card called the Klarna Card, which is exclusive to customers in Germany and Sweden. 

The Klarna card offers customers access to more payment options, including installment payments over a more extended period.

Klarna makes money from the Klarna Card by charging merchants a fee for each transaction made using the card and by earning interest from customer balances. 

The interest rate ranges from 9.9% to 19.9%, depending on the customer’s creditworthiness.

App Fees

Klarna offers an app that enables customers to manage their purchases, make payments, and keep track of their outstanding payments. 

While the app is free to download and use, Klarna charges merchants a fee for the ability to offer the app to their customers.

Late Fees

If a customer fails to pay their installment payments on time, Klarna charges a fee. While this isn’t a significant source of revenue for the company, it does help to offset some of the administrative costs associated with managing overdue payments.

Klarna’s Partnerships

Klarna has formed partnerships with various businesses globally, including retail, fashion, travel, and more, to offer consumers flexible payment options when shopping online. 

These partnerships have helped Klarna to expand its reach and diversify its revenue streams. Here are some of Klarna’s key partnerships:


Klarna and Amazon teamed up to offer customers the ability to pay for their Amazon purchases using Klarna’s payment solutions. 

This has helped to increase Klarna’s brand reputation and drive user acquisition.


Klarna and fashion giant H&M partnered to launch a “buy-now-pay-later” service. This allows customers to split their payments into four installments. 

The partnership has been a hit among younger shoppers looking for convenient ways to shop online.


Klarna partnered with e-commerce platform Shopify to give merchants who use Shopify’s platform access to Klarna’s payment solutions. 

This has helped to boost Klarna’s reach in the e-commerce industry and made it more competitive against other payment providers.


Funding and Valuation

Klarna’s rapid growth has been supported by significant investments from venture capitalists and institutional investors. 

The funds have enabled the fintech firm to grow its operations globally, develop additional payment solutions, and introduce mobile applications to make payments more accessible to consumers.

In August 2021, Klarna announced that it had raised $639 million in an investment round, raising its valuation to $45.6 billion. This funding has helped the company to explore new business areas and expand existing ones.

Pro Tips

To make the most out of Klarna’s services, consider these pro tips:

  • Read the terms and conditions: Familiarize yourself with Klarna’s payment options and understand the terms, repayment schedules, and potential fees involved.
  • Budget effectively: Take advantage of Klarna’s flexibility, but ensure you have a plan in place to manage your repayments effectively.
  • Use buyer protection: Klarna offers buyer protection, which can be beneficial in case of order issues or disputes.
  • Check for promotions: Keep an eye out for exclusive deals and discounts available through Klarna’s partnerships with retailers.

Frequently Asked Questions

How does Klarna differ from traditional payment methods?

Klarna stands out from traditional payment methods by offering flexible payment options, such as buy now, pay later, and installment plans. It removes the need for upfront payments and offers a smoother user experience.

What are the benefits of using Klarna?

Using Klarna allows customers to split their payments into installments, defer payments, and enjoy interest-free periods. It provides more financial flexibility and convenience, enhancing the overall shopping experience.

How does Klarna ensure security for its users?

Klarna employs several security measures, including encryption technology and fraud prevention systems, to ensure the safety of users’ personal and financial information.

How does Klarna make money without charging interest?

Although Klarna doesn’t charge interest to its users, it earns revenue through transaction fees charged to merchants, referral fees, and commissions from partnerships.

Is Klarna available in my country?

Klarna operates in several countries worldwide, including the United States, United Kingdom, Germany, Australia, and many more. It continues to expand its global presence, so it may be available in your country. Check Klarna’s website for a list of supported regions.


Klarna’s unique business model and flexible payment options have helped the company to become one of the leading fintech firms in the industry. 

The company’s ability to generate revenue from a range of sources has helped its financial position to stay strong, even amid major financial crises.

With a strong focus on innovation and expansion, Klarna is in a good position to continue growing in the future. The company may explore new partnerships, introduce new payment solutions, and expand its operations into new territories in the coming years, ensuring its growth and success in the fintech industry for years to come.