"Buy now, pay later" is booming: Europe's biggest fintech Klarna hits a $46B valuation

Friday, June 11, 2021 by Robinhood Snacks |

Love the AllSaints biker jacket... don't love the $500 price tag. Klarna helps you sport that leather now, and pay for it later by spreading out payments as interest-free monthly installments. The Swedish company just raised $640M at a huge $46B valuation, becoming Earth's second most valuable private fintech after Stripe. Quick Klarna stats:

  • Numbers: 90M+ global active users, with 2M transactions per day.
  • $$$: Klarna posted record annual revenue of $1.2B last year on fees from merchants, but its loss grew.
  • Investors: Backers include Softbank, Snoop Dogg, and A$AP Rocky.

Speaking of ASAP... People want retail therapy immediately, but want to pay for it ASLP (as late as possible). Klarna is one of the buy-now-pay-later firms — like Affirm and Afterpay — that have been thriving since the pandemic began. PayPal also intro'd a BNPL checkout option last year. Money was tight, and spending moved online. It took Klarna eight years to hit a $1B valuation, but less than 12 months to go from $5.5B to $46B. It could go public this year.


BNPL eases the "mental accounting" burden... It can help rationalize large purchases by breaking them into smaller chunks in our minds. With a credit card, you have to fully pay off purchases at the end of the month to avoid interest. With BNPL, that $3K Peloton suddenly seems "affordable" at $50/month. Hence: merchants often see a boost in sales after offering Klarna's service. But that easy accounting could also come with financial consequences for some.