Klarna Launches Visa Debit Card as BNPL Model Stumbles, Aims for Broader Banking Role Ahead of IPO

Klarna, the Swedish giant of Fintech, once considered the face of the booming trend “Buy now, pay later” (BNPL), has taken an important measure to rename itself as a more robust financial services company.

The company now pilots its own visa debit card in the United States, nicknamed the Klarna card, while it moves to extend its offers beyond short-term credit. Klarna says that the card will be deployed across Europe later this year.

The time for launching the product is significant. Klarna’s foray into the payment cards market comes in the middle of increasing pressure on its BNPL basic activity, which has been faced with mounting losses and tight regulations. Once celebrated for having disrupted traditional credit models, BNPL products – which allow consumers to divide purchases into several interest -free payments – is now struggling under the weight of the increase in failures, the evolution of consumer behavior and the increase in regulator exam around the world.

Klarna de Bnpl’s revenues have suffered in particular in the past two years. While economic conditions tightened and inflation eroded the capacity of consumers to reimburse in time, the company has seen a peak in delinquations. While Klarna has since reduced the costs and reduces its workforce, it continues to operate at a loss, a contrast that is striking with its peak of 2021 when it was the most precious private technology in Europe with an evaluation of $ 45.6 billion. This assessment was reduced by 85% in 2022, reflecting growing doubts about the sustainability of its original commercial model.

The new debit card is Klarna’s most daring attempt to diversify income sources and position itself as more than one pony in a turn. According to the company, the Klarna card works mainly as a debit card, but users can go to its BNPL options – including “pay in 4” or “pay in 30 days” – at the cash register. The card is supplied by the technology of flexible visa diplomas, which allows consumers to access several sources of financing from a single payment method.

“We want the Americans to start associating not only to buy now, to pay later, but to [with] The type of experience of the Paypal portfolio that we have, as well as the Neobank offer that we offer, “Klarna CEO, Klarna CEO, Siemiatkowski, last month.

Unlike traditional debit cards linked to cheap accounts in banks, the Klarna card is linked to accounts that have deposits provided by FDIC via Webbank, a partner bank based in UTAH. This structure allows Klarna to bypass the need for its own American banking license while offering consumers many advantages of a full -service bank. Users can make payments, remove funds and switch between payment methods with the same card, which is in three color options: eggplant, black and bright green. Klarna also offers advantages on several levels, including discounts and cashback.

The American market – dominated by giants like Jpmorgan Chase and Bank of America – is already competitive, and Klarna will compete with neobanks such as carillon and fintech players like Paypal, which also pivoted in banking services. Klarna says more than 5 million people have already joined the waiting list for the new card, reporting a strong interest in consumers despite cooling the BNPL media.

The company’s pivot to the integrated financing and payment infrastructure reflects wider trends in the Fintech sector, where companies that have developed by offering niche products are now rushing to become complete digital banks. But Klarna’s strategic thrust comes with an additional emergency: it is preparing for a first public offer (IPO), which has recently been postponed due to the uncertainty of the financial market after new American rates.

Analysts see the Klarna card as a critical test to find out if the company can successfully transform itself into a sustainable fintech platform. Regulators in the United Kingdom, the United States and Australia all have increased monitoring of BNPL companies, which forces them to meet more rigorous loan and consumer protection standards. This adds additional pressure to companies like Klarna to reduce dependence on delayed payment models.

While Klarna still has a complete banking license in the European Union, its ambitions in the United States – the largest consumer market in the world – greatly depend on its ability to adapt. The new debit card, supported by Visa’s infrastructure and regulatory partnerships, can offer Klarna a second wind, but this also signals a fundamental change: a change in the distance from aggressive loans that made it famous, towards a more measured banking approach which could finally lead the company to sustainable profitability.

Fintech companies want a scanning action. Tuesday, buy now, paying Pioneer Klarna announced the beginnings of a debit card fueled by Visa which, according to CNBC, indicates the ambitions of the Swedish startup to become a “banking player while buried” as he plans 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 article that a Paypal product for store use has long been among the “most requested” to customers.