While Klarna may still be best known for its BNPL services, the Swedish unicorn has been steadily expanding its other services with an eye on reaching profitability sooner rather than later. It holds a banking license in the EU, which allows it to offer up to 3.58% interest on deposits for European customers. In August, it launched two new products. First, the Klarna balance lets users store money in a personal account, which can be used for instant purchases and to pay off BNPL loans. Second, Klarna cashback rewards consumers with a percentage of their purchases at participating retailers made through the Klarna app—with rewards conveniently deposited into their Klarna balance. These products are launching in 11 European countries as well as the U.S.

Though Klarna has been trying to position itself as an ecosystem, we are not sold on the idea. It has been a bank in Germany since 2021, without a dramatic impact on its financial performance. In addition, Klarna is not able to pay interest to deposit holders in the U.S., which will restrict its growth in the world’s largest economy.

In the heady pandemic days of bloated startup valuations, Klarna and other boosters of BNPL claimed that the rise of the service would disrupt credit cards and herald a major shift in consumer spending habits. But credit cards remain extremely popular with consumers because of their loyalty programs, especially those involving airlines and hotels. BNPL cannot offer the same benefits. 

Even if you are a true believer in BNPL, Klarna’s business strategy relies in no small part on the U.S. market – where competition is stiff. Affirm, Afterpay and PayPal all have a strong presence in the U.S. Further, Zip's U.S. transactions jumped 43% year-on-year to $1.3 billion in its first quarter of fiscal 2025 ended September 30. 

It remains to be seen if Klarna can effectively differentiate itself in the U.S. market and persuade investors in America's capital markets that it offers something more than stylized installment payments.