Klarna's Strategic Shift: From BNPL Leader to Neobank and Mobile Service Provider

Swedish fintech company Klarna, renowned for its "buy now, pay later" (BNPL) services, is undergoing a significant transformation into a neobank. This strategic shift involves diversifying its offerings to include traditional banking products such as debit and credit cards, as well as mobile services.

In June 2025, Klarna launched a U.S. debit card in partnership with Visa, allowing users to choose between immediate payments or installment options for both online and in-store purchases. The company plans a broader rollout in the U.S. and Europe later this year. Due to the absence of a U.S. banking license, the debit card and associated accounts are issued by WebBank, a Utah-based institution. The physical card is available in aubergine, black, and bright green, with tiered options offering varying levels of discounts and cashback.

Expanding beyond financial products, Klarna announced its entry into the U.S. mobile services market by launching an unlimited 5G mobile plan priced at $40 per month. This service is supported by Gigs, a U.S. startup backed by Google that partners with AT&T to enable businesses to act as mobile virtual network operators (MVNOs). Klarna's mobile services will begin in the U.S., its largest market with over 25 million users, before expanding to the UK, Germany, and other countries later this year. CEO Sebastian Siemiatkowski emphasized that mobile services are a logical extension of the company's neobank ambitions.

Klarna has postponed its initial public offering (IPO) due to market instability following U.S. tariff upheavals. The company had planned to raise over $1 billion at a valuation above $15 billion. Market analysts state that such instability often leads companies to delay IPOs. Klarna had 93 million users across 26 countries by the end of 2024 and has seen its valuation drop from a peak of $45.6 billion in 2021 as online spending slowed post-pandemic.

Klarna's evolution reflects its response to challenges in the BNPL market, including rising interest rates, increased competition, and regulatory scrutiny. The company reported a 17% rise in credit losses in Q1 2025, amounting to $136 million. Despite this, Klarna claims the increase is proportional to loan growth and sees no weakened U.S. consumer. BNPL usage has expanded, with 277.3 million loans issued in 2022. However, regulation is loosening as the Trump administration chooses not to enforce a Biden-era rule introducing consumer protections. Experts warn this deregulatory move and lack of proper oversight increase risks for borrowers, especially as economic pressures mount.

Founded in 2005 by Sebastian Siemiatkowski, Klarna is most known for its landmark BNPL product, which enables shoppers to delay or split payments across interest-free installments. The company has been calling for proportionate regulation of BNPL across many of its major markets. In the U.S., Klarna has outlined BNPL regulation and urged rulemaking to ensure consumers are protected and can continue to use the clear, transparent product that more Americans are choosing at checkout.

Klarna's transformation into a neobank signifies a broader trend of fintech companies diversifying their services to become comprehensive financial service providers. This shift could increase competition with traditional banks and other fintech firms, potentially leading to more innovative and consumer-friendly financial products. However, the expansion into mobile services and traditional banking products also subjects Klarna to new regulatory environments and operational challenges. The postponement of its IPO highlights the sensitivity of fintech valuations to geopolitical events and market conditions.

As Klarna continues to evolve, its strategic initiatives will be closely watched by industry observers and consumers alike, as they may set a precedent for other fintech companies aiming to expand their service offerings and market presence.