Klarna is a Swedish company that offers financial services. It provides payment solutions for online stores and also allows customers to buy now and pay later in installments. Customers can either pay upfront or spread the cost of their purchase over time. Klarna makes money by charging fees to retailers and interest to customers who choose to finance their purchases.
Klarna was founded in 2005 and has since then grown into one of the largest fintech companies in Europe. In 2018, the company processed more than $20 billion in transactions and had over 60 million users. Klarna is now available in 14 countries and is continuing to expand its reach.
So, How does Klarna makes money?
Klarna’s primary source of income is from charging merchants instead of consumers. Now let’s examine some of the company’s other revenue streams.
The main source of revenue comes from merchant fees. Retailers who use Klarna’s payment solutions are charged a fee for each transaction. The fee is typically a percentage of the total purchase price, and it varies depending on the country and type of product being purchased.
In addition to merchant fees, Klarna also generates revenue from interest charges. Customers who choose to finance their purchases with Klarna are charged interest on the outstanding balance. The interest rate depends on the customer’s credit history and other factors, but it’s typically lower than traditional credit cards.
Also Klarna makes money from interchange fees. These are the fees that card issuers charge when customers use their cards to make purchases. When customers use their credit or debit cards to pay for their purchases, Klarna collects the interchange fee and keeps a portion of it as revenue.
Klarna also charges late fees to customers who don’t make their payments on time. The late fee is typically a percentage of the outstanding balance, and it’s charged every time a payment is missed.
In addition to the fees mentioned above, Klarna also charges other miscellaneous fees. For example, there’s a 2.5% foreign transaction fee for purchases made in a currency other than the customer’s home currency. There are also fees for things like returned items and canceled orders.
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So those are some of the ways that Klarna makes money. By offering payment solutions to retailers and financing to customers, Klarna is able to generate revenue from merchant fees, interest charges, interchange fees, and other miscellaneous fees.