Klarna Secures $26 Billion for US BNPL Expansion

Flexible payments firm/digital bank Klarna says it has landed $26 billion in new funding.

That’s the result of a multi-year agreement with financial services and investment firm Nelnet, the company announced Friday (Aug. 15). Under this arrangement, Klarna will sell up to $26 billion in receivables from its “Pay in 4” installment program to Nelnet.

“This is a landmark transaction for Klarna in the U.S.” Niclas Neglén, CFO at Klarna, said in the news release. “Our partnership with Nelnet allows us to scale a core product responsibly, while continuing to deliver smooth, interest-free payment experiences to millions of consumers.”

Klarna said the deal will support the ongoing expansion of Pay in 4 in the U.S., and that the flow-forward structure of the funding underscores its ability to carry out large-scale capital markets transactions.

“Klarna will continue to originate and service all receivables under the program, ensuring continuity and quality of experience for both consumers and merchant partners,” the news release added.

The announcement follows the recent release of Klarna’s second-quarter earnings, which showed the company’s year-over-year revenue growth accelerating to 20%. That’s up from 15% in the first quarter, a trend driven by the company’s expanding merchant ecosystem and its engagement with consumers.

Growth was particularly strong in the U.S., the Swedish company added, with revenues climbing 38% year over year.

During the second quarter, Klarna debuted the U.S. pilot of the enhanced Klarna Card; began powering OnePay Later at Walmart; and extended its partnership with eBay to the U.S. In the quarters to come, the company plans to introduce collaborations with Worldpay, Nexi and JPMorgan Payments.

Meanwhile, recent research by PYMNTS Intelligence shows the prevalence of buy now, pay later (BNPL) services like Klarna in consumers’ lives.

So much so, the report found, that many consumers would either choose not to make the payment or purchase at all (43%) or opt to buy a cheaper product or service (42.4%), if BNPL options were available.

In addition, 35.1% of consumers said they would complete the payment but delay other due payments, underscoring the influence of BNPL on overall spending patterns.

The research also examined the major players in the American BNPL market, finding that Klarna held the largest estimated market share at 26.2%, followed by Afterpay, with an estimated 21.9% share, and Affirm, with 19.3% of the market.