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How Does Klarna Make Money

How Does Klarna Make Money

Curious about how Klarna, the famous Swedish fintech unicorn, creates cash? You’ve come to the ideal spot!

This article breaks down the diverse ways Klarna earns money from its consumers. Folks are increasingly turning to digital financial stages, so comprehending how they earn money is vital for keeping up-to-date. Let’s get into it!


Klarna is a fintech company that makes it easy for customers to shop online and pay for their purchases in installments. It offers shoppers convenience, safety, and exclusive promos. So, many prefer Klarna to other payment methods. But how does Klarna make money?

Klarna profits by helping merchants accept installment payments securely and with low fees. It offers them flexible payment solutions that meet the needs of their customers. The company makes money through merchant services fees and interest on installment payments. To do this, it partners with banks, e-commerce companies, and other fintech organizations. Klarna also earns interest on unpaid balances when payment plans expire or are closed early.

Overview of Klarna

Klarna is a Swedish-based fintech firm. Its goal is to make shopping easy by providing users the ability to purchase now and pay later. There are lots of payment options, like instant checkout, interest payments, and interest-free installments. No upfront cost or hidden fees. Plus, it offers money management tools, like budgeting and money tracking.

Merchants can offer customers flexible payments. They benefit from cross-border transactions, better customer service and loyalty. Also, Klarna data analytics help merchants improve marketing strategies and conversions. Banks gain access to Klarna’s network of creditworthy shoppers.

How does Klarna make money? It charges merchants fees for each transaction. Fees depend on processing fees, services like fraud prevention or currency conversion. It makes money from returns or non-refundable costs if the consumer doesn’t pay. Late fees are also charged, with an initial fee plus interest based on the consumer’s credit score.

Klarna’s Business Model

Klarna is an online payment system that enables customers to purchase items and pay for them later. Founded in Sweden in 2005, it has spread to 15 countries, working with some of the world’s major ecommerce brands.

Its business model is based on offering customers access to financing. Customers have the option to buy items and make payments over time. Klarna generates revenue from a few services: consumer financing, merchant services and risk management services.

Consumer Financing: Customers are given the choice of several payment plans. For every agreement, Klarna charges merchants fees ranging from 1-3%, plus a one-time fee for every new user registration.

Merchant Services: Merchants pay for services like order tracking and fraud detection for secure transactions. They usually pay an additional 0.5-1% service charge on top of their regular credit card rate.

Risk Management Services: Klarna has strategies to reduce financial loss from its “Pay Later” product. These strategies target reducing fraud losses and non-payment from customers who can’t pay their debts on time. Fees for this service vary depending on risk levels and market conditions, usually around 2%.

Klarna’s Revenue Sources

Klarna is an ace payment solutions provider, making it simple for customers to shop from their favorite brands in a safe manner. It offers three different models: pay now, later, or in installments. This has made Klarna popular with merchants around the world. But, how do they make money?

Klarna earns revenue through two ways: interest on deferred payments and merchant fees.

Interest: If customers opt to defer their purchase or buy in installments, Klarna charges an interest fee, which is around 15-30%.

Merchant Fees: Klarna charges merchants who use its services. These fees differ by country but generally range from 1-2.5% of the total cost (including taxes and charges).

Klarna also charges additional fees when interest is overdue or when payments are declined. This helps them protect their losses from late or nonpayment. Furthermore, services like fraud prevention and ‘buy now, pay later’ also contribute to Klarna’s revenue.

Klarna’s Payment Solutions

Klarna earns money from its payment solutions. It offers services like KPay, which let customers buy items with a few clicks.

SlaPPS helps shoppers pay in installments. INSTAFF helps customers save before they buy. Pay Upon Receipt lets customers try products for free and only pay if they keep them. Shop Now, Pay Later allows shoppers to delay payment till later. Split It with Klarna lets customers split the cost between cards and accounts.

Merchants pay Klarna fees every time customers use their services. Fees vary, but can be 2-3% per transaction. Also, merchants pay for late payments on Klarna’s platforms.

Klarna’s Expansion Strategies

Klarna is a global payments provider for customer service, growing rapidly by expanding its services into various countries and working with new partners. They believe technology can make payments easier and more secure. Their mission is to create great experiences for customers and merchants, no matter where they are or what time it is.

Klarna employs aggressive expansion techniques to stay ahead of competition, such as providing direct banking services, consumer financing options and integrating with top eCommerce platforms. They especially target the retail sector with partnerships that provide installment payments, virtual cards and loyalty programs.

Klarna makes money primarily from fees charged for payment processing through online, mobile app and in-store (POS). Fees are calculated as a percentage of the purchase price, plus merchant transaction fees (which vary by market). They also get income from interest on consumer credit financing plans offered through some merchants. Moreover, they offer marketing services to their customers, including targeted ads, which brings in more income.

Challenges Faced by Klarna

Klarna has experienced great success, but faces many obstacles. These include customer satisfaction, fraud reduction, and adaptation to the ever-changing market.

Customer Satisfaction: Klarna must provide timely support, flexible payment options, and secure payments. They created an in-depth delivery experience framework and detailed incident response processes. They also invested in security infrastructure to reduce fraud risk.

Fraud Reduction: Klarna has implemented sophisticated machine learning algorithms to detect anomalous behavior. They also use IP address verification, 3-D Secure authentication from card issuers, and advanced anti-fraud policies.

Adaptability: Klarna must understand consumer demands, reconcile new legislation, and expand into new areas. They are able to offer customized solutions for various types of businesses, while keeping consumer data safe with end-to-end encryption of sensitive information.


Klarna earns money by charging merchants for the services it offers and customers when they use installment plans. It does not have to pay for bad debts, as these are charged to merchants. The company also earns interest on its funds, and gets additional capital from investors and lenders. Moreover, data-driven analysis and customer behavior prediction help optimize Klarna’s services.

All this has made Klarna a convenient payment partner for businesses in Europe and the US. Thus, it is an innovative way of paying for goods and services online.

Frequently Asked Questions


Q: How does Klarna make money?
A: Klarna makes money by charging merchants and shoppers fees for their services. They also make money through interest generated from financing options for shoppers.

Q: What fees does Klarna charge?
A: Klarna charges merchants a fee of 1.5-3.0% of the order value to use their payment processing service. They also charge shoppers a late fee if they don’t make their payment on time.

Q: Are there any additional fees associated with Klarna?
A: Yes, Klarna also charges merchants a setup fee, a monthly fee, and a fee for refunds. They also charge shoppers a fee for returns.