Dive Brief:

• The Swedish buy now, pay later giant Klarna said it has begun offering savings accounts to its customers in the U.S. and 12 European countries, according to a Thursday post on the company’s website. Customers can use money from the accounts to pay for items using Klarna’s trademark installment payment app.
• In another new development, customers will receive cash-back rewards for using the company’s app when they spend at certain retailers. Customers may receive up to 10% in cash from retailers who are part of Klarna’s new program, the post said.
• Klarna made clear that it’s taking the banking industry on with its latest moves. “This marks a significant step forward in Klarna’s mission to disrupt retail banking and become an every day spending partner to the world’s consumers,” the company said in the post.

Dive Insight:

With the two new features, Klarna is seeking to make inroads with consumers around the world and change the ways in which they use their money to make payments, and now handle their money. 

The company had been offering the accounts in Germany since 2021, according to Bloomberg.

Consumers in the U.S. will now be able to transfer money to the Klarna app from their bank accounts and also receive refunds from retailers to the app account. Using Klarna’s signature BNPL services, consumers can finance the purchase of an item with a down payment and an agreement to pay off the full amount in three more payments over six weeks. Late fees and other charges may still apply in certain situations. 

The Klarna move means the company is ready to take on major U.S. banks, such as JPMorgan Chase, Bank of America and Wells Fargo. As for which company might act as a bank for the new Klarna accounts, the company was mum on that point.

“We’re working with a number of partners to bring the product to market in the US. I'm afraid we're not making the banks' names public,” a Klarna spokesperson said by email.

Stockholm-based Klarna already made a run at the U.S. banks when it reintroduced its branded credit card in April, with an assist from banking partner WebBank and the card network Visa. Klarna ditched an earlier 2022 attempt at a credit card program.

As Klarna seeks to expand its presence in banking, it still faces competition from other BNPL providers, including San Francisco-based Affirm. 

The BNPL industry is experiencing increasing pushback from regulators seeking to protect consumers from a new form of debt. The Consumer Financial Protection Bureau proposed an interpretive rule in May to treat any BNPL loans as the agency would treat financing provided by credit cards.

Money held in Klarna’s accounts won’t receive the same FDIC insurance guarantee as funds held at U.S. banks. The company expects the new accounts will “be primarily a vehicle for consumers to receive cashback and get their refunds faster,” and doesn’t “anticipate US consumers holding large amounts” in such accounts, the spokesperson said.

“Today's launches are a major step forward, allowing consumers to earn money while they shop and manage it in a Klarna account,” the company’s CEO, Sebastian Siemiatkowski, said in the post. Asked to elaborate on the company’s reasoning for entering the banking business, a Klarna spokesperson said: “We want to help consumers with their everyday spending in areas where traditional banks have not always had their customers' best interests at heart.”

Using the Klarna app, the company’s customers can also pay for goods and services immediately, and about a third of them do, the spokesperson said.