Klarna, the Swedish fintech giant once seen as the face of the booming “buy now, pay later” (BNPL) trend, has taken a major step to rebrand itself as a more robust financial services company.
The firm is now piloting its own Visa debit card in the United States, dubbed the Klarna Card, as it moves to expand its offerings beyond short-term credit. Klarna says the card will be rolled out across Europe later this year.
The timing of the product launch is significant. Klarna’s foray into the payment card market comes amid growing pressure on its core BNPL business, which has faced mounting losses and tighter regulation. Once celebrated for disrupting traditional credit models, BNPL products — which allow consumers to split purchases into multiple interest-free payments — are now struggling under the weight of rising defaults, changing consumer behavior, and increasing scrutiny from regulators across the globe.
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Klarna’s revenues from BNPL have suffered notably in the past two years. As economic conditions tightened and inflation eroded consumers’ ability to repay on time, the company saw a spike in delinquencies. While Klarna has since slashed costs and cut its workforce, it continues to operate at a loss, a stark contrast to its 2021 heyday when it was Europe’s most valuable private tech firm with a $45.6 billion valuation. That valuation was cut by 85% in 2022, reflecting growing doubts over the sustainability of its original business model.
The new debit card is Klarna’s boldest attempt yet to diversify revenue streams and position itself as more than a one-trick pony. According to the company, the Klarna Card functions primarily as a debit card, but users can switch to its BNPL options — including “Pay in 4” or “Pay in 30 Days” — at checkout. The card is powered by Visa’s Flexible Credential technology, which allows consumers to access multiple funding sources from a single payment method.
“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,” Klarna CEO Sebastian Siemiatkowski told CNBC’s “The Exchange” last month. “We are basically a neobank to a large degree, but people associate us still strongly with buy now, pay later.”
Unlike traditional debit cards tied to checking accounts at banks, the Klarna Card is linked to accounts that hold FDIC-insured deposits through WebBank, a Utah-based partner bank. This structure enables Klarna to sidestep the need for its own U.S. banking license while still offering consumers many of the benefits of a full-service bank. Users can make payments, withdraw funds, and switch between payment modes with the same card, which comes in three color options: aubergine, black, and bright green. Klarna also offers tiered perks including discounts and cashback.
The U.S. market — dominated by giants like JPMorgan Chase and Bank of America — is already competitive, and Klarna will be going head-to-head with neobanks such as Chime and fintech players like PayPal, which also pivoted into banking-like services. Klarna claims that over 5 million people have already joined the waitlist for the new card, signaling strong consumer interest despite the cooling of the BNPL hype.
The company’s pivot toward embedded finance and payment infrastructure mirrors broader trends in the fintech sector, where firms that once grew by offering niche products are now racing to become full-stack digital banks. But Klarna’s strategic push comes with added urgency: it is preparing for an initial public offering (IPO), which was recently postponed due to financial market uncertainty following new U.S. tariffs.
Analysts see the Klarna Card as a critical test of whether the firm can successfully transform into a sustainable fintech platform. Regulators in the U.K., U.S., and Australia have all increased oversight of BNPL firms, requiring them to meet more rigorous lending and consumer protection standards. This adds further pressure on companies like Klarna to reduce reliance on deferred-payment models.
While Klarna still holds a full banking license in the European Union, its ambitions in the U.S. — the world’s largest consumer market — depend heavily on its ability to adapt. The new debit card, supported by Visa’s infrastructure and regulatory partnerships, may offer Klarna a second wind, but it also signals a fundamental change: a shift away from the aggressive lending that made it famous, toward a more measured, bank-like approach that could finally lead the company to sustainable profitability.
Fintech firms want some swiping action. On Tuesday, Buy Now, Pay Later pioneer Klarna announced the debut of a Visa-powered debit card that, per CNBC, signals the Swedish startup’s ambitions of becoming an “all-encompassing banking player” as it plans for a public offering later this year. Also on Tuesday, PayPal launched a physical credit card in partnership with MasterCard. CEO Alex Chriss noted in a LinkedIn post that a PayPal product for in-store use has long been among the “most requested” from customers.