Press "Enter" to skip to content

Klarna Lost $344 Million Amidst Rising Demand of Buy Now Pay Later Services

Urian B., Tech Times

(Photo : Image from on Unsplash) Klarna Lost $344 Million Amidst Rising Demand of Buy Now Pay Later Services

Klama, a Swedish fintech start-up, has lost $344 million due to costs sharply increasing amidst the rising demand for buy now pay later services. The loss was felt during the first nine months of this year as the firm posted a fourfold increase on its loss of $88 million during the same period in 2020.

$46 Billion Valuation for Klarna

According to the story by CNBC, Klarna was able to gain a valuation of $46 billion around June of this year. Going back to losses, a chunk of it came from general administrative expenses, totaling over $1 billion USD compared to the previous $648K in 2020.

Credit losses also started to rise, totaling $318K year-to-date. This was an increase from the previous $175K during the same period in 2020. Amidst the news, a Klarna spokesperson stated that they entered nine new markets in 2020, which got them over 90 million customers worldwide.

Expectations for the Future of the Market

The spokesperson emailed CNBC that each market entry follows what was described as a “consistent financial trajectory,” explaining that as volume grows, more Klarna users come as well. The statement also noted that once market knowledge improves and credit risk starts to decrease, this would make mature markets sustainably profitable.

Klarna is known as one of the largest players in the buy now pay later market. Buy now, pay later, and BNPL products allow users to split the immediate purchase into a series of monthly installments which are often interest-free.

Afterpay and Affirm, two of Klarna’s competitors, make their money from fees charged from merchants for processing these transactions. Some companies in this field also make money through late payment fees and interest being charged over longer-term installments.

Surge in Demand for BNPL Products

There has been a surge in demand for BNPL products over the last year, thanks to the acceleration of e-commerce adaptation that was triggered by the coronavirus pandemic. Millions of shoppers are now using buy now pay later services to help finance their purchases.

Big tech companies are now starting to jump on the bandwagon, launching their own product companies like PayPal. To join the bandwagon, Apple and Amazon are partnering up with Affirm, while Square has just agreed to buy Afterpay for $29 billion.

Read Also: Russell 2000 Down by 3.6% with S&P 500, NASDAQ 100, DOW 30, and US Dollar Index In the Red as Well

Klarna’s Expansion Into the US Market

Klarna has started expanding into the US and Britain territory aggressively recently. On the other hand, the company is known to control around 18% share in the BNPL market in the United States as of November 17, as per YipitData’s figures provided to CNBC.

Affirm has the largest market share of 36%, while Afterpay follows with 21% of the US BNPL market. With that, the Klarna card is expected to roll out for US users, as per an article by TechCrunch.

Related Article: Holiday Scams: The New Go-to for Modern Day Criminals

This article is owned by Tech Times

Written by Urian B.

ⓒ 2021 All rights reserved. Do not reproduce without permission.

Be First to Comment

Leave a Reply

Your email address will not be published.