Klarna

Founding and early years

Klarna was founded in 2005 by Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson after the founders developed an idea for simplifying online payments. The company was initially known as Kreditor and was supported by SSE Business Lab, the Stockholm School of Economics' start-up incubator. The early business idea centered around allowing consumers to receive goods before paying by taking on the role of credit and fraud risk for merchants.

Angel investor Jane Walerud became an early backer of the company, offering the founders SEK 600,000 for 10% of the company after seeing the idea presented and later connecting them with developers who helped build the platform. Erlang programming language was utilized in Klarna's early technical architecture, a point associated with Walerud's background at Erlang Systems.

In 2007, Investment AB Öresund invested in the company. Klarna subsequently expanded outside Sweden, first to Norway, Finland and Denmark, and later to Germany and the Netherlands. In 2009, the company changed the Kreditor name to Klarna.

Expansion, acquisitions and banking license

In 2010, Sequoia Capital invested in Klarna. In 2011, Klarna was listed by The Daily Telegraph among Europe's promising young technology companies. In May 2011, Klarna acquired Analyzd, an Israeli company specializing in online payments, risk management and fraud prevention. Later that year, General Atlantic led a $155 million investment round, joined by DST Global, to accelerate international expansion.

Klarna Checkout was launched in 2012 as an embedded checkout product for online merchants. By 2024, the product had a 40% market share in Sweden and over 20% across the Nordic region before the company sold the business that same year.

In 2013, Klarna acquired German online payments company SOFORT AG, operator of Sofortüberweisung, forming Klarna Group.

Klarna launched in the United States in 2015, which became one of the company's main growth markets. In the same year, Sweden's then Minister for Enterprise and Innovation, Mikael Damberg, described Klarna as one of Sweden's five "unicorn" technology companies, alongside Spotify, Mojang, Skype and King.

In June 2017, Klarna received a full banking license from the Swedish Financial Supervisory Authority. In 2018, the company acquired Close Brothers Retail Finance in the United Kingdom, strengthening its UK retail finance position.

Klarna operates a digital payments and commerce network connecting consumers and merchants. Its main product lines include Pay Now, for immediate payments and everyday spending; Pay Later, a short-term zero-interest credit product; and point-of-sale installment financing for larger purchases. Klarna also offers cards, banking and savings features in selected markets, checkout and payment infrastructure for merchants, shopping discovery tools, advertising products and retail marketing services.

Klarna's original model was built around invoice-based payment after delivery. In this model, the consumer could complete a purchase without entering card details and pay after receiving the goods, while Klarna processed the payment and took on part of the merchant's credit and fraud risk. Historically, the company's services included products such as Klarna Invoice, Klarna Account, Klarna Checkout and Klarna Direct; these product names and local implementations varied by country and over time as the company broadened its banking and payment offerings.

The company describes its credit discipline as based on short loan durations and real-time re-underwriting of transactions. In its first-quarter 2026 results, Klarna said it had underwritten about $0.5 trillion over 20 years and that its provisions for credit losses were 0.55% of GMV in Q1 2026, compared with 0.54% in Q1 2025. Its 2025 IPO filing also emphasised proprietary data and automated credit underwriting capabilities derived from transaction data on its network.

In June 2024, Klarna announced the sale of Klarna Checkout to a consortium led by BLQ Invest and described the transaction as part of a refocus on flexible payment methods distributed through multiple payment service providers. In 2025 and 2026, the company highlighted distribution partnerships with payment service providers such as Stripe and Nexi, and said JPMorgan Payments and Worldpay were expected to go live as partners.

Regulation and controversies

Consumer credit regulation

Klarna's buy now, pay later products have been subject to regulatory scrutiny in multiple jurisdictions. In the United Kingdom, government and parliamentary documents noted concerns that the rapid growth of interest-free BNPL products could cause consumer detriment, and the Financial Conduct Authority said deferred payment credit would enter FCA regulation from 15 July 2026. In 2022, the FCA also secured contract changes from several BNPL firms, including Klarna, after identifying potentially unfair or unclear terms.

In Sweden, the Swedish Consumer Agency contacted Klarna in 2014 after complaints that customers had received reminder fees and debt collection communications without first receiving an invoice; the agency also examined credit fees connected to partial payments. In Germany, the District Court of Bremerhaven ruled in 2022 that Klarna could not charge a flat €1.20 fee for an email reminder where it had not shown corresponding costs.

Advertising and marketing

In December 2020, the UK's Advertising Standards Authority banned a Klarna Instagram influencer campaign, ruling that four posts had irresponsibly encouraged the use of deferred payment services to improve mood during the COVID-19 lockdown. In October 2020, Klarna mistakenly sent marketing emails to people who said they had not signed up for them, prompting the UK's Information Commissioner's Office to make enquiries.

Privacy, data and AML

In February 2020, German privacy specialists reported an autofill data issue at Klarna in which third parties could access address data, dates of birth and telephone numbers when they knew a customer's email address and postal code; the report said Klarna instructed merchants to turn off the autofill function temporarily. In May 2021, a technical incident in the Klarna app allowed some users to view data belonging to other customers for a short period. Klarna attributed the incident to human error, while Finansinspektionen later opened an investigation into a possible breach of bank secrecy rules.

In March 2022, the Swedish Authority for Privacy Protection imposed an administrative fine of SEK 7.5 million on Klarna Bank AB for shortcomings in its privacy information. In March 2024, a Swedish administrative court of appeal upheld the fine. In December 2024, Finansinspektionen issued Klarna Bank AB a formal remark and an administrative fine of SEK 500 million for violations of Swedish anti-money laundering regulations, citing deficiencies in general risk assessment and customer due diligence procedures.

Layoffs, AI and staffing

In May 2022, Klarna said it would lay off about 10% of its approximately 7,000 employees, citing deteriorating business sentiment linked to inflation and the war in Ukraine. The handling of the layoffs was criticised after Siemiatkowski published a list of affected employees on LinkedIn, which some observers described as insensitive.