Klarna launches bank-like personal account, cashback ahead of IPO

Financial technology company Klarna is pushing deeper into banking with its own checking account-like product and a cashback offer that rewards users for shopping through the app.

The company, best known for its “buy now, pay later” loans that allow consumers to pay for their purchases through interest-free monthly installments, said Thursday it is launching the new products as it wants to “disrupt retail banking” and encourage banking. customers can move their spending and savings to the platform.

“These new products make it easier for customers to manage multiple scheduled payments, allowing our customers to use Klarna for more frequent purchases and increasing loyalty,” Sebastian Siemiatkowski, CEO and founder of Klarna, told CNBC.

Siemiatkowski said Klarna wants to “support all consumers with their everyday spending,” adding that the products will allow people to “earn money while they shop and manage it in a Klarna account.”

The two new products, which are being rolled out in twelve markets including the US and across Europe, will appear in the Klarna app as ‘balance’ and ‘cashback’.

Klarna Balance allows users to store money in a bank-like personal account, which they can then use to make instant purchases and pay off their purchase now, and pay off loans later.

Users can also receive refunds for returned items directly to their Klarna balance.

Cashback offers customers the opportunity to earn up to 10% of the value of their purchases at participating retailers as a reward. All money earned is automatically saved to their balance account.

It’s not Klarna’s first foray into more traditional banking; the company has been offering checking accounts and savings products in Germany since 2021.

Now the company is expanding these banking products to other markets.

Customers in the EU – where Klarna has an official banking license – can earn as much as 3.58% interest on their deposits. However, US customers will not be able to receive interest.

The launch marks a major step forward in Klarna’s product range, as the fintech giant moves closer to a highly anticipated US IPO.

Klarna has not yet set a firm timeline for the stock exchange listing. However, in an interview with CNBC’s “Closing Bell” in February, Siemiatkowski said an IPO this year was “not impossible.”

“We still have a few more steps and work to do,” he said. “But we would like to become a publicly traded company.”

In the meantime, Klarna is in talks with investors about a secondary stock sale to provide some liquidity to its employees, a person familiar with the matter told CNBC.

Klarna’s valuation on the open secondary market currently stands at more than ten billion euros, said the source, who spoke on condition of anonymity because details of the share sale are not yet public.