Klarna

Swedish bank with retail payments focus

Key Data

  • Trading Name: Klarna
  • Legal Entities: Klarna Bank AB
  • Activities: banking, Buy-Now-Pay-Later
  • Location: Sweden
  • Regulations: regulated bank
  • Key People: Sebastian Siemiatkowski, Niklas Adalberth, Victor Jacobsson.

Klarna is the brand of the Swedish Klarna Bank AB and provides payment services. They are focused on e-commerce and process payment services around online stores.

As of the end of 2020, the company had more than 3,000 employees, most of them working at the headquarters in Stockholm. In 2019, the company handled about $35 billion in online sales.

Klarna was founded in 2005 by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson.

Offering

Klarna enables end consumers to pay for their online orders using invoice, instant bank transfer, or installment payments. With invoice purchases in online shops, consumers receive the goods before payment, which provides security for consumers but entails the risk of payment default for merchants. Providers like Klarna allow customers to make invoice purchases and guarantee payment to merchants. With instant bank transfer, customers pay immediately upon placing the order and then receive their goods. Installment payments allow consumers to split the due amount into multiple installments and pay them over a longer period. Klarna’s installment payment does not differ from traditional installment plans, but it is processed directly through Klarna rather than a third-party bank collaborating with the shop.

For Merchants Klarna enables merchants to integrate invoice, instant bank transfer, and installment payment as payment methods in their online shops. The company assumes the risk of fraud and default. This means that Klarna pays the outstanding invoice amount to shop operators if a consumer has not paid their invoice within the deadline, including in cases of fraud. On the other hand, Klarna offers online shops a system called Klarna Checkout, where orders can be completed with just a few clicks. If the end consumer has previously paid with Klarna, details such as the billing address or date of birth are already stored and do not need to be manually entered. It is sufficient for consumers to enter their email address and postal code.

Recent Developments

Under its terms, Klarna says that would does not accept unethical business models and thus excludes high-risk merchants. No customers from adult businesses, gambling, drug businesses, money and finance businesses, or MLM systems would be accepted.

However, FinTelegram FinTelegram report about Klarna that Klarna was active as a payment processor for unlicensed online casinos and gambling providers. In doing so, the company is apparently violating its values and principles.

Costumer Review

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Compliance Conclusion

Klarna is a regulated financial services provider with sufficient capital and has recently been moving toward profitability. This is why we have maintained Klarna’s Green Compliance rating despite its entry into the high-risk payment sector.

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