Klarna’s IPO tests the strength of BNPL | PaymentsSource

Buy now/pay later interest has picked up steam in recent years as more consumers become attracted to short-term installment lending to finance a variety of everyday purchases, and Swedish BNPL giant Klarna is hoping to capitalize on growth with its long-awaited U.S. initial public offering. 

Klarna on Nov. 12 filed a confidential IPO registration with the Securities and Exchange Commission. Details of the transaction were not provided. But Klarna in late October held an estimated valuation of $14.6 billion following an additional investment from one of its shareholders, Chrysalis Investors.

Klarna declined to comment further on its IPO.

Other BNPL lenders are awaiting the IPO, betting it will boost further growth for the product. Global BNPL volume has increased from $50 billion in 2019 to $370 billion in 2023, according to the National Bureau of Economic Research.

The IPO is “super exciting” because it marks a continued validation in the buy now/pay later model, said Arad Levertov, co-founder and CEO of Sunbit, a BNPL and credit card provider that focuses on auto repair, health care and dentistry, among other industries, at the point of sale. 

“Fintech in general is gaining back some momentum. Affirm gained trust with investors, which means that the model, if you can make it work, is a good model,” Levertov said. 

“For BNPL, the [business to business to consumer model] is the direction. You don’t spend all the money to acquire the customer like the bank. You actually partner with the merchant. The merchant wants to get more sales,” Levertov said. “Affirm has proven it. Klarna has proven it … any validation that this model that is working, that gains credibility with investors, will help [both Sunbit and the BNPL industry].” 

Whether Klarna’s estimated $14 billion price tag holds is still up for debate, said Eric Grover, principal of Intrepid Ventures. 

“Klarna has been this super hype, would-be payments system, BNPL [and] consumer credit disruptor. I think it was usually overvalued in the era of free money,” Grover said, referring to skyrocketing fintech valuations during the COVID-19 pandemic. 

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Klarna has a solid business model, but is “not some sort of new, disruptive payment system. It’s a multinational provider of short-term, low-friction consumer credit. There’s always going to be demand for that,” Grover said. 

Notably, Klarna has reined in some spending and expectations, Grover said. In August, Klarna Chief Executive Sebastian Siemiatkowski said it brought in about 73% more revenue per employee thanks to new forms of artificial intelligence. AI also contributed to a reduction of head count to about 3,800 employees, down from 5,000 in August 2023.

Klarna’s IPO also signals its continued commitment to growing in the U.S. market, said Ben Danner, a senior analyst with Javelin Strategy and Research. “They’re really trying to do a push in the U.S. and become even larger than they already are in the Nordics and European space. They’re trying to get their physical card out [in the U.S.] too.” 

The Swedish BNPL provider has been aggressive in its U.S. expansion. In October, the fintech got a boost from Big Tech with partnerships with Dutch payment technology company Adyen and Apple, to which it is both an authorized reseller and integrated at Apple Pay checkout. The company has also inked new U.S. partnerships with Staples, Worldpay and RiteAid in the last two months. It began offering retail banking services in August. 

Klarna will have to continue to compete with Affirm — which is one of the largest BNPL providers in the U.S. and has been on a tear over the last two quarters as it looks to gain more users and hit profitability goals in 2025 — as well as Afterpay and PayPal. But Klarna will also have to compete to be top of wallet with other burgeoning BNPL providers — such as Zip. Co., which logged a 42.8% year-over-year increase in total transaction volume for its U.S.-based operations to $1.3 billion in its first quarter of fiscal 2025 ended Sept. 30, 2025 — and credit unions, which are fighting to stay relevant with their own BNPL offerings.  

“I suspect [Klarna] will have a successful IPO, but it’s not going to cut Mastercard, Visa and American Express off at the knees,” Grover said.