How Does Klarna Make Money? [Business Model]

Klarna is a payment processing company that operates in Europe and North America. In this article, we’ll answer “how does Klarna make money?” And what is its marketing strategy? We’ll also discuss the business model in brief.

How does Klarna make money?

Klarna makes money by charging a per-transaction fee to merchants for enabling Pay Later on their stores. Along with that, Klarna also charges an APR of 0 to 24.99% for all purchases made by buyers. The company charges a late fee in case any of the installments are missed.

What is Klarna?

Klarna is a Swedish payment company that was founded in 2005. The company allows customers to make purchases without having to enter their credit card information. Klarna also offers a payment plan option for those who want to pay for their purchase over time. It follows the BNPL or “Buy Now Pay Later” financing model.

Why Klarna Has A Robust Business Model

Klarna doesn’t hold any of the money that it processes for its merchants. Instead, it partners with banks and other financial institutions to handle the payments. This way, Klarna can avoid holding any funds itself and taking on any associated risk.

This company only acts as a mediator between buyers and sellers, which is why it can charge a lower transaction fee than most other payment processors.

Klarna also uses its data to provide better insights to merchants about their customers. This way, businesses can make more informed decisions about how to market to them and what products to offer.

Klarna’s financial Performance in 2021

In 2021, Klarna is expected to generate $673 million in revenue. This number is projected to grow at a compound annual growth rate (CAGR) of 25.0% over the next five years.

The company’s net income is also forecast to increase significantly, reaching $101 million by 2021. This would result in a net margin of 15.0%.

Klarna’s strong financial performance is due to the company’s growing popularity among online shoppers. Its easy and convenient payment solution is a major draw for consumers, and its partnerships with leading companies like Spotify only help to increase its reach.

How does Klarna make money?

Klarna is a payment processing company that makes money by charging merchants a fee for each transaction. The company also earns interest on the money it holds in its accounts. Klarna’s marketing strategy is to offer merchants and consumers an easy way to pay for goods and services.

Value Proposition of Klarna

Klarna is a payment solution that offers buyers an easy and convenient way to pay for their purchases. It’s also very secure, which is why so many online shoppers trust it.

Here are some of the key benefits of using Klarna:

– Easy checkout – No need to enter your credit card details every time you make a purchase

– Convenient – Pay for your purchases over time, without having to worry about interest rates or late fees

– Safe and secure – Klarna is PCI compliant and uses the latest security technologies to protect your data

Also read: How Do Banks Make Money? Unravel the Bank Business Model

Klarna’s Business Model

Klarna’s business model is based on taking a small fee for each transaction that takes place through its service. This fee is paid by the merchant, not the shopper. This means that Klarna doesn’t have to worry about whether or not a shopper will be able to pay for their purchase. Klarna also makes money from interest on loans that it offers to shoppers.

Their marketing is based on giving shoppers a choice.

Shoppers can either pay for their purchase right away or they can choose to pay for it over time. This gives shoppers the flexibility to choose the payment option

The company partners with retailers to provide a checkout option that allows consumers to pay for items with a credit or debit card, or through their bank account. Klarna also offers consumers the option to pay for goods over time, without interest charges.

This allows consumers to spread out the cost of larger purchases over several months. Klarna is currently available in 18 countries. The company plans to expand its operations into additional markets in the near future.

Klarna is a privately held company and does not release financial information to the public. However, it is estimated that the company earned over $USD 57.3bn in 2021!

Klarna’s investors include Sequoia Capital, Atomico, and General Atlantic.

Global Gross Merchandise Volume1 Q3 YTD 2021 at USD 57.3bn2 compared to USD 35.2bn3 YTD in 2020 driven by Klarna’s growing global active consumer base and enhanced growth proposition for Klarna’s 250,000+ retail partners.

Klarna makes money from 2 major sources:

  • Merchant fees: Klarna charges merchants a fee for each transaction that takes place through the service. At present, Klarna charges $0.3 per transaction fee along with a variable fee of up to 3.8%.
  • Interest on loans: When a shopper chooses to pay for their purchase over time, Klarna lends them the money and charges interest on the loan. Klarna charges an annual percentage rate (APR) between 0-24.99%

Klarna Marketing Strategy

Klarna is known for its “buy now, pay later” option, which allows customers to pay for their purchases over time. This service is especially popular among millennials, who often don’t have the money to make large purchases all at once.

Klarna also offers a subscription service that lets customers pay for items over time without having to go through the “buy now, pay later” process. This service is especially popular among businesses, as it allows them to offer installment plans to their customers.

My philosophy when it comes to social is that the platform that caters to the creators in the best way is going to win. That is why I think that Facebook has failed in the last couple of years because my mother is basically a top creator on Facebook.

So for brands, I do think not being associated with the platform itself, not being associated with the capabilities, but actually harnessing the immense creativity and imagination that these people hold [is the key].

It is beyond astonishing the imagination that you see on TikTok. Any kind of brand brief now says, “We want to start a TikTok challenge,” but having the opportunity and possibility to actually start something like that with the help of creators — and inserting your brand in a pop-cultural discussion — at least for now, that is the holy grail.

Klarna CMO David Sandström

Klarna has been very successful in the U.S. market, and its popularity continues to grow. In fact, the company is now worth an estimated $20 billion.


Klarna is a company that has found success by offering a unique product that fills a need in the market. Its business model is based on taking a small fee for each transaction processed, as well as collecting interest on the money that it holds for customers. This allows Klarna to make a profit while also keeping borrowing costs down for its merchants. Klarna’s marketing strategy has been to partner with major brands and offer services as a payment option. This has helped the company grow rapidly, and it is now one of the leading providers of online payments.