The Rundown Deep Dive: Can Klarna's IPO Live Up to the Hype?
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Sep 6, 2025 Klarna is on the verge of its long-anticipated IPO, sparking excitement and skepticism. The discussion unveils how the company profits without charging interest. It’s emerging as a major player in the U.S. market, transitioning from 'Buy Now Pay Later' to a comprehensive shopping super-app. The fintech faces fierce competition from rivals like Affirm and PayPal. Additionally, looming regulatory challenges add to the scrutiny. Is this IPO a smart investment or just another overhyped fintech tale?
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BNPL Is Old Idea, New Scale
- Buy Now, Pay Later (BNPL) repackages installment credit for the e‑commerce era and exploded in usage over the last decade.
- BNPL reached $342 billion globally in 2024 and now accounts for nearly 9% of e‑commerce spending.
Klarna Makes Money From Merchants
- Klarna primarily earns merchant fees, not shopper interest, taking about 2–3% per transaction as its main revenue source.
- Merchant fees account for 76% of Klarna's revenue and align the company to gross merchandise volume growth.
US Is Klarna's Biggest Growth Engine
- The U.S. has become Klarna's largest and fastest growing market after a major partnership with Walmart.
- U.S. revenue grew 38% last quarter, and only ~10% of U.S. consumers use Klarna versus 82% in Sweden.