Swedish fintech Klarna yesterday announced that it’s rolling out its first-ever debit card, in an attempt to position itself as more than just a Buy Now Pay Later (BNPL) company.
With over 5 million people on the waitlist and a big launch planned for later this year across the UK and Europe, it’s set to be a big launch.
But why now?
A History of Buy Now Pay Later
To understand why Klarna is doing this now, we probably need to go back and look at both the history, and recent regulation changes around Buy Now, Pay Later.
BNPL gained traction in the 2010s as a way to help consumers buy items and pay for them in smaller instalments. Different from a credit card, with BNPL, buyers could split their payments into interest-free instalments over a number of weeks or months.
For consumers, this felt like a loophole around traditional, high-interest credit cards.
For sellers, it increased conversion – making it popular, and fast.
Because of this, the UK’s BNPL market experienced incredible growth, being valued at $11.46 million in 2023. (Next MSC).
Klarna was at the forefront of this, officially becoming a unicorn just 6 years after it was founded.
But now, the company is facing wider issues due to new rules around BNPL.
New BNPL Regulations
Just this month, the UK government announced new rules to crack down on the previously unregulated BNPL sector.
It was believed that BNPL was putting consumers in danger by encouraging them to overspend on items that they couldn’t actually afford.
Because of this, the UK has announced that BNPL companies will have to adopt similar practices to other types of loans, which include assessing affordability by looking at income, outgoings and other debts.
BNPL purchases will also fall under the Consumer Credit Act, giving shoppers the ability to raise official complaints and access more transparent terms around repayments, late fees and defaults.
This crackdown came after government figures found that over 11 million people in the UK used a BNPL service over the last year. This usage is especially high amongst single parents and young women, which raised questions around how financially responsible these services really are.
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Why Klarna Is Launching A Card Now
The new Klarna Card, which combines debit and BNPL functionality, is launching at an important time for the company.
In Q1 2025, Klarna reported a $99 million net loss. The company also paused its IPO in April, further raising eyebrows about the stability of the company.
At the same time, Klarna is trying to change its image from just BNPL to wider financial services. Speaking to CNBC, CEO Sebastian Siemiatkowski said “We want Americans to start to associate us with not only buy now, pay later, but [with] the PayPal wallet type of experience that we have, and also the neobank offering that we offer. We are basically a neobank to a large degree, but people associate us still strongly with buy now, pay later.”
A huge part of this push is the new Karna Card, which is powered by Visa and allows users to flip between debit, credit and BNPL functionality in real-time.
For Klarna, this move does three main things:
Diversifies its offering beyond just BNPL, which makes up a huge chunk of its revenue, leaving it vulnerable to policy changers.
Increases user engagement, with card users transacting three times more often than app-only customers.
Gives the company a more well-rounded offering, potentially making it stronger ahead of their IPO.
Is Klarna’s Debit Card the Answer?
The Klarna Card sounds like a good way for the company to evolve beyond just BNPL, but it’s not without its issues.
While the company advertises the card as “fee-free,” that only applies to standard debit use.
According to Tech Funding News, the fine print reveals a slightly different story, with BNPL usage on the card coming with charges that many users aren’t expecting, including a a $1–3 charge per “Pay in 4” transaction.
Given that no fees were a common draw for BNPL payments, this could put Klarna on the back foot.
However, some of the main draws of the card include:
- An FDIC-insured wallet
- An AI assistant that can curate discounts and manage repayment schedules.
- Upgrades that offer benefits like cashback and discounts with certain merchants.
And it’s certainly popular. With a current waitlist of 5 million, Klarna’s new card could be a huge driver for the business.
Klarna Card: Risk or Reward?
Klarna’s new card could be a big move for the company – but only if they play it right.
Whilst it does signal the start of Klarna’s diversification away from just BNPL, it also comes with a number of questions around how good the card really is and how transparent the company is being about fees.
But one thing is for sure – against net losses in 2025, it will be interesting to see if the card breathes new light into Klarna or if it’s simply too late.
